Read first time 01/16/12.   Referred to Committee on Community & Economic Development & Housing.

     AN ACT Relating to designating innovation partnership zones; and amending RCW 43.330.270, 43.160.010, 43.160.020, and 82.14.370.

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

Sec. 1   RCW 43.330.270 and 2009 c 72 s 1 are each amended to read as follows:
     (1) The department ((shall)) must design and implement an innovation partnership zone program through which the state will encourage and support research institutions, workforce training organizations, and globally competitive companies to work cooperatively in close geographic proximity to create commercially viable products and jobs.
     (2) The director ((shall)) must designate innovation partnership zones on the basis of the following criteria:
     (a) Innovation partnership zones must have three types of institutions operating within their boundaries, or show evidence of planning and local partnerships that will lead to dense concentrations of these institutions:
     (i) Research capacity in the form of a university or community college fostering commercially valuable research, nonprofit institutions creating commercially applicable innovations, or a national laboratory;
     (ii) An industry cluster as defined in RCW 43.330.090. The cluster must include a dense proximity of globally competitive firms in a research-based industry or industries or ((of)) individual firms with innovation strategies linked to (a)(i) of this subsection. A globally competitive firm may be signified through international organization for standardization 9000 or 1400 certification, or ((other recognized)) evidence of sales in international ((success)) markets; and
     (iii) Training capacity either within the zone or readily accessible to the zone. The training capacity requirement may be met by the same institution as the research capacity requirement, to the extent both are associated with an educational institution in the proposed zone.
     (b) 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;
     (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 innovation partnership zone administrator must be an economic development council, port, workforce development council, city, or county.
     (3) With respect solely to the research capacity required in subsection (2)(a)(i) of this section, the director may waive the requirement that the research institution be located within the zone. To be considered for such a waiver, an applicant must provide a specific plan that demonstrates the research institution's unique qualifications and suitability for the zone, and the types of jointly executed activities that will be used to ensure ongoing, face-to-face interaction and research collaboration among the zone's partners.
     (4) On October 1st of each odd-numbered year, the director ((shall)) must designate innovation partnership zones on the basis of applications that meet the legislative criteria, estimated economic impact of the zone, evidence of forward planning for the zone, and other criteria as ((recommended by)) developed by the department in consultation with the Washington state economic development commission. Estimated economic impact must include evidence of anticipated private investment, job creation, innovation, and commercialization. The director ((shall)) must require evidence that zone applicants will promote commercialization, innovation, and collaboration among zone residents.
     (5) Innovation partnership zones are eligible for funds and other resources as provided by the legislature or at the discretion of the governor.
     (6) If the innovation partnership zone meets the other requirements of the fund sources, then the zone is eligible for the following funds relating to:
     (a) The local infrastructure financing tools program;
     (b) The sales and use tax for public facilities in rural counties; ((and))
     (c) Job skills;
     (d) Local improvement districts; and
     (e) Community economic revitalization board projects under chapter 43.160 RCW.
     (7) An innovation partnership zone ((shall)) must 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.
     (8) If the director finds that an applicant does not meet all of the statutory criteria or additional criteria recommended by the department in consultation with the Washington state economic development commission to be designated as an innovation partnership zone, the department must:
     (a) Identify the deficiencies in the proposal and recommended steps for the applicant to take to strengthen the proposal;
     (b) Provide the applicant with the opportunity to appeal the decision to the director; and
     (c) Allow the applicant to reapply for innovation partnership designation on October 1st of the following calendar year or during any subsequent application cycle.
     (9) If the director finds at any time after the initial year of designation that an innovation partnership zone is failing to meet the performance standards required in its contract with the department, the director may withdraw such designation and cease state funding of the zone.
     (((9))) (10) The department ((shall)) must convene annual information sharing events for innovation partnership zone administrators and other interested parties.
     (((10))) (11) An innovation partnership zone ((shall)) must annually provide performance measures as required by the director, including but not limited to private investment measures, job creation measures, and measures of innovation such as licensing of ideas in research institutions, patents, or other recognized measures of innovation.
     (((11))) (12) The department ((shall)) must compile a biennial report on the innovation partnership zone program by December 1st of every even-numbered year. The report ((shall)) must provide information for each zone on its: Objectives; funding, tax incentives, and other support obtained from public sector sources; major activities; partnerships; performance measures; and outcomes achieved since the inception of the zone or since the previous biennial report. The Washington state economic development commission ((shall)) must review the department's draft report and make recommendations on ways to increase the effectiveness of individual zones and the program overall. The department ((shall)) must submit the report, including the commission's recommendations, to the governor and legislature beginning December 1, 2010.

Sec. 2   RCW 43.160.010 and 2008 c 327 s 1 are each amended to read as follows:
     (1) The legislature finds that it is the public policy of the state of Washington to direct financial resources toward the fostering of economic development through the stimulation of investment and job opportunities and the retention of sustainable existing employment for the general welfare of the inhabitants of the state. Reducing unemployment and reducing the time citizens remain jobless is important for the economic welfare of the state. A valuable means of fostering economic development is the construction of public facilities which contribute to the stability and growth of the state's economic base. Expenditures made for these purposes as authorized in this chapter are declared to be in the public interest, and constitute a proper use of public funds. A community economic revitalization board is needed which shall aid the development of economic opportunities. The general objectives of the board should include:
     (a) Strengthening the economies of areas of the state which have experienced or are expected to experience chronically high unemployment rates or below average growth in their economies;
     (b) Encouraging the diversification of the economies of the state and regions within the state in order to provide greater seasonal and cyclical stability of income and employment;
     (c) Encouraging wider access to financial resources for both large and small industrial development projects;
     (d) Encouraging new economic development or expansions to maximize employment;
     (e) Encouraging the retention of viable existing firms and employment; ((and))
     (f) Providing incentives for expansion of employment opportunities for groups of state residents that have been less successful relative to other groups in efforts to gain permanent employment; and
     (g) Enhancing job and business growth through facility development and other improvements in innovation partnership zones designated under RCW 43.330.270.
     (2) The legislature also finds that the state's economic development efforts can be enhanced by, in certain instances, providing funds to improve state highways, county roads, or city streets for industries considering locating or expanding in this state.
     (3) The legislature finds it desirable to provide a process whereby the need for diverse public works improvements necessitated by planned economic development can be addressed in a timely fashion and with coordination among all responsible governmental entities.
     (4) The legislature also finds that the state's economic development efforts can be enhanced by, in certain instances, providing funds to assist development of telecommunications infrastructure that supports business development, retention, and expansion in the state.
     (5) The legislature also finds that the state's economic development efforts can be enhanced by providing funds to improve markets for those recyclable materials representing a large fraction of the waste stream. The legislature finds that public facilities which result in private construction of processing or remanufacturing facilities for recyclable materials are eligible for consideration from the board.
     (6) The legislature finds that sharing economic growth statewide is important to the welfare of the state. The ability of communities to pursue business and job retention, expansion, and development opportunities depends on their capacity to ready necessary economic development project plans, sites, permits, and infrastructure for private investments. Project-specific planning, predevelopment, and infrastructure are critical ingredients for economic development. It is, therefore, the intent of the legislature to increase the amount of funding available through the community economic revitalization board and to authorize flexibility for available resources in these areas to help fund planning, predevelopment, and construction costs of infrastructure and facilities and sites that foster economic vitality and diversification.

Sec. 3   RCW 43.160.020 and 2009 c 565 s 35 are each amended to read as follows:
     Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.
     (1) "Board" means the community economic revitalization board.
     (2) "Department" means the department of commerce.
     (3) "Local government" or "political subdivision" means any port district, county, city, town, special purpose district, and any other municipal corporations or quasi-municipal corporations in the state providing for public facilities under this chapter.
     (4) "Public facilities" means a project of a local government or a federally recognized Indian tribe for the planning, acquisition, construction, repair, reconstruction, replacement, rehabilitation, or improvement of: Bridges((,)); roads((,)); research, testing, training, and incubation facilities in areas designated as innovation partnership zones under RCW 43.330.270; buildings or structures; domestic and industrial water, earth stabilization, sanitary sewer, storm sewer, railroad, electricity, telecommunications, transportation, natural gas, ((buildings or structures,)) and port facilities((,)); all for the purpose of job creation, job retention, or job expansion.
     (5) "Rural county" means a county with a population density of fewer than one hundred persons per square mile or a county smaller than two hundred twenty-five square miles, as determined by the office of financial management and published each year by the department for the period July 1st to June 30th.

Sec. 4   RCW 82.14.370 and 2009 c 511 s 1 are each amended to read as follows:
     (1) The legislative authority of a rural county may impose a sales and use tax in accordance with the terms of this chapter. The tax is in addition to other taxes authorized by law and ((shall)) must 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)) may not exceed 0.09 percent of the selling price in the case of a sales tax or value of the article used in the case of a use tax, except that for rural counties with population densities between sixty and one hundred persons per square mile, the rate shall not exceed 0.04 percent before January 1, 2000.
     (2) The tax imposed under subsection (1) of this section ((shall)) must be deducted from the amount of tax otherwise required to be collected or paid over to the department of revenue under chapter 82.08 or 82.12 RCW. The department of revenue ((shall)) must perform the collection of such taxes on behalf of the county at no cost to the county.
     (3)(a) Moneys collected under this section ((shall)) may only be used to finance public facilities serving economic development purposes in rural counties and finance personnel in economic development offices. The public facility must be listed as an item in the officially adopted county overall economic development plan, or the economic development section of the county's comprehensive plan, or the comprehensive plan of a city or town located within the county for those counties planning under RCW 36.70A.040. For those counties that do not have an adopted overall economic development plan and do not plan under the growth management act, the public facility must be listed in the county's capital facilities plan or the capital facilities plan of a city or town located within the county.
     (b) In implementing this section, the county ((shall)) must consult with cities, towns, and port districts located within the county and the associate development organization serving the county to ensure that the expenditure meets the goals of chapter 130, Laws of 2004 and the requirements of (a) of this subsection. Each county collecting money under this section ((shall)) must report, as follows, to the office of the state auditor, within one hundred fifty days after the close of each fiscal year: (i) A list of new projects begun during the fiscal year, showing that the county has used the funds for those projects consistent with the goals of chapter 130, Laws of 2004 and the requirements of (a) of this subsection; and (ii) expenditures during the fiscal year on projects begun in a previous year. Any projects financed prior to June 10, 2004, from the proceeds of obligations to which the tax imposed under subsection (1) of this section has been pledged ((shall)) may not be deemed to be new projects under this subsection. No new projects funded with money collected under this section may be for justice system facilities.
     (c) The definitions in this section apply throughout this section.
     (i) "Public facilities" means bridges, roads, domestic and industrial water facilities, sanitary sewer facilities, earth stabilization, storm sewer facilities, railroads, ((electricity)) electrical facilities, natural gas facilities, research, testing, training, and incubation facilities in innovation partnership zones designated under RCW 43.330.270, buildings, structures, telecommunications infrastructure, transportation infrastructure, or commercial infrastructure, and port facilities in the state of Washington.
     (ii) "Economic development purposes" means those purposes which facilitate the creation or retention of businesses and jobs in a county.
     (iii) "Economic development office" means an office of a county, port districts, or an associate development organization as defined in RCW 43.330.010, which promotes economic development purposes within the county.
     (4) No tax may be collected under this section before July 1, 1998.
     (a) Except as provided in (b) of this subsection, no tax may be collected under this section by a county more than twenty-five years after the date that a tax is first imposed under this section.
     (b) For counties imposing the tax at the rate of 0.09 percent before August 1, 2009, the tax expires on the date that is twenty-five years after the date that the 0.09 percent tax rate was first imposed by that county.
     (5) For purposes of this section, "rural county" means a county with a population density of less than one hundred persons per square mile or a county smaller than two hundred twenty-five square miles as determined by the office of financial management and published each year by the department for the period July 1st to June 30th.