SENATE BILL REPORT

SB 5135

This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent.

As of February 28, 2017

Title: An act relating to modifying the Washington main street program by increasing the total amount of tax credits allowed under the program and making administrative changes to the program.

Brief Description: Modifying the Washington main street program by increasing the total amount of tax credits allowed under the program and making administrative changes to the program.

Sponsors: Senators Rivers, Rolfes, Zeiger, Walsh, Angel, Keiser, Mullet, Cleveland, Hunt, Bailey, King, Warnick, Brown, Fain, Ranker, Van De Wege, Conway and Wellman.

Committee Activity: Agriculture, Water, Trade & Economic Development: 1/26/17.

Brief Summary of Bill

Increases the tax credit limit for contributions made statewide and makes administrative changes to the Main Street Program.

SENATE COMMITTEE ON AGRICULTURE, WATER, TRADE & ECONOMIC DEVELOPMENT

Staff: Greg Vogel (786-7413)

Background: The Main Street Program (Program) was created in 2005 to provide technical assistance for local comprehensive downtown or neighborhood commercial district revitalization initiatives. The Program is operated by the Department of Archeology and Historic Preservation (Department).

The Department provides initial site evaluations by technical specialists, training for local programs and staff, as well as design and implementation assistance to local governments and organizations for revitalization programs. The Department also may provide financial assistance for initial start-up costs for a local program.

The Department may designate local comprehensive downtown or neighborhood commercial district revitalization programs and official local Main Street programs based on certain criteria. The boundaries of a local program must be approved by the Department and are generally defined by the pedestrian core of a traditional commercial district. The Department may not designate a program undertaken by a local government with a population over 190,000 people.

The Main Street Trust Fund Account receives private contributions, federal funds, and legislative appropriations for the operation of the Main Street Program.

Private contributions made to the Main Street Program Trust Fund or a designated local Main Street program are eligible for a business & occupation tax or public utility tax credit. The credit is valued as follows:

75 percent of a contribution made directly to a designated program in a city under 190,000; and
50 percent of a contribution made to the Main Street Trust Fund.

No person may receive a tax credit over $250,000 in each calendar year. The total tax credits allowed for each designated program may not exceed $100,000 per calendar year. The total tax credits allowed statewide may not exceed $1.5 million for each calendar year.

Summary of Bill: The tax credit limit for contributions made statewide is raised to $5 million. The following administrative changes are made to the Program:

The Department may not accept any applications before the second Monday in January of each calendar year.
Between the second Monday in January and March 31st of the same calendar year, the Department must evenly allocate the amount of statewide credits allowed under the Program, based on the total number of programs and the Main Street Trust Fund as of January 1st in the same calendar year.
The Department may not approve contributions for a program or the Main Street Trust Fund that would cause the total amount of approved credits for a program or the Main Street Trust Fund to exceed the allocated amount.
A person that was approved for a credit must make the total approved contribution by November 15th of the calendar year in which the application is approved.
The Program expires January 1, 2028, if a review by the Joint Legislative Audit and Review Committee finds that the number of small businesses that are a part of Main Street communities is not equal to or more than the number that were a part of Main Street communities prior to the enactment of the tax preference.

Appropriation: None.

Fiscal Note: Available.

Creates Committee/Commission/Task Force that includes Legislative members: No.

Effective Date: Ninety days after adjournment of session in which bill is passed.

Staff Summary of Public Testimony: PRO: This bill allows support for the development and growth of small businesses in the downtown core areas of small communities. The demand for the Program is so strong that once it opens, the funds are spent immediately. The number of programs has increased to 34, with the cap on the Program being fully extinguished. Increasing the cap allows for growth. Local communities have reported the success of the Program, but have also expressed frustration with funds running out and support the increase of the statewide limit.

Persons Testifying: PRO: Senator Ann Rivers, Prime Sponsor; Chris Moore, WA Trust for Historic Preservation; Randall Smith, Kent Downtown Partnership; Seth Normington, Waterville Main Street; Amber Carter, Client, Identity Clark County.

Persons Signed In To Testify But Not Testifying: No one.