SENATE BILL REPORT
ESSB 5677
As Amended by House, April 11, 2025
Title: An act relating to associate development organizations.
Brief Description: Concerning associate development organizations.
Sponsors: Senate Committee on Business, Financial Services & Trade (originally sponsored by Senators Cortes, Frame, Riccelli and Schoesler).
Brief History:
Committee Activity: Business, Financial Services & Trade: 2/13/25, 2/19/25 [DPS, DNP, w/oRec].
Floor Activity: Passed Senate: 3/4/25, 46-3.
Passed House: 4/11/25, 95-0.
Brief Summary of Engrossed First Substitute Bill
  • Increases the amount of assistance that Associate Development Organizations can provide for direct assistance in urban and rural areas. 
  • Permits the matched portion of the allocation to be provided through cash, in-kind, or a combination.
  • Requires Associate Development Organizations to meet the standards for maintaining, collecting, and presenting federal data on race and ethnicity.
SENATE COMMITTEE ON BUSINESS, FINANCIAL SERVICES & TRADE
Majority Report: That Substitute Senate Bill No. 5677 be substituted therefor, and the substitute bill do pass.
Signed by Senators Kauffman, Chair; Cortes, Vice Chair; Hasegawa, Lovick and Stanford.
Minority Report: Do not pass.
Signed by Senators Dozier, Ranking Member; Fortunato and McCune.
Minority Report: That it be referred without recommendation.
Signed by Senator Wilson, J..
Staff: Clint McCarthy (786-7319)
Background:

Associate Development Organizations.  Washington is composed of 39 counties, each of which can designate an Associate Development Organization (ADO) that furthers the county's or region's economic development goals. The Department of Commerce (Commerce) contracts with the designated ADOs in order to coordinate and increase support for community and economic development services in communities or regional areas. Commerce's 2023 annual report identifies contracts with 35 ADOs.

 

ADOs are under contract with the state to provide economic development services in the communities that they represent. As part of their contracts, ADOs are required to submit annual performance reports to Commerce, which Commerce compiles as a report and submits to the Legislature biennially.


The annual base funding an ADO receives from the state is dependent on local matching funds as well as whether the county served is a rural county. Funding is provided on a per capita basis. Commerce may consider an ADO's total resources when making contracting and fund allocation decisions.

 

Contracts with Associate Development Organizations. Commerce must contract with county-designated ADOs to increase support and coordination of community and economic development in certain communities or areas. The scope of services must include direct assistance to companies throughout the area that need support to stay in business, expend, or relocate to Washington from out of state or other countries.  Assistance must comply with business recruitment and retention protocols.

 

Since 1997, ADO's have been directed to have contracts that require the delivery of direct assistance to companies needing support to survive, expand, or relocate. The contracts will also require support for regional economic research and regional planning efforts to implement economic development strategies. 

 

When appropriations are provided by the Legislature, contracts with ADO's shall be awarded based on the following annual schedule:

  • for ADO's in urban counties, a locally matched allocation of up to $0.90 per capita totaling no more than $300,000 per organization; and
  • for ADO's in rural counties, a per county base allocation of up to $40,000 and a locally matched allocation of up to $0.90 per capita.

 

Contracting ADOs are required to provide Commerce with an annual report including measures of their performance and a summary of best practices shared and implemented. Commerce is required to submit a report to the Legislature in each even-numbered year on the performance results of the contracts with the ADOs.
Summary of Engrossed First Substitute Bill:

Removes reporting requirements of ADOs concerning businesses that receive retention and expansion services, as well as businesses that received recruitment, retention, and expansion services located outside the boundaries of the largest city in the county.   

 

The schedule for awards is modified as follows:

  • for ADOs in urban counties, a per county allocation totaling no more than $500,000 per organization and a matched allocation; and
  • for ADOs in rural counties, a per allocation of at least $85,000 and up $150,000.

 

The matched allocation may be provided through cash, in-kind, or a combination, with the in-kind match limited to 25 percent.  

 

ADOs are required to provide the Department of Commerce with additional demographic information that  meets the standards for maintaining, collecting, and presenting federal data on race and ethnicity as described by the federal Office of Management and Budget Statistical Policy Directive No. 15 as published on March 29, 2024 as part of an annual reporting requirement.
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 on Original Bill:

PRO:  WEDA is committed to recruiting and retaining businesses in Washington State.  This assistance is needed to get people between the ages of 18 and 54 working again.  This bill allows ADOs to expand their tool kit to attract and retain businesses.  ADOs bring revenue to the state by engaging with existing and new businesses.  ADO's play a critical role with small businesses.  Increasing the funding cap will enable ADO's to leverage more private investment.
Persons Testifying: PRO: Senator Adrian Cortes, Prime Sponsor; Suzanne Dale Estey, Washington Economic Development Association; Darrin Raines, Greater Grays Harbor, Inc. (ADO for Grays Harbor County); Jennie Dickinson, Port of Columbia (ADO for Columbia County); Jennifer Baker, Columbia River Economic Development Council (ADO for Clark County); Lynnette Buffington, Seattle Metro Chamber.
Persons Signed In To Testify But Not Testifying: No one.
EFFECT OF HOUSE AMENDMENT(S):
  • Removes additional demographic data reporting requirements that ADOs would have been required to submit to the Department of Commerce. 
  • Reverts the schedule of rewards back to current law. 
  • Allows for a locally matched allocation that includes a combination of nonstate funds, cash, or in-kind contributions as long as it does not include general fund state appropriations as part of the matching funds provided by the ADO.