House Bill Analysis, HB 1406, Concerning associate development organizations (Hearing 1/29/25)

Summary

House Bill Analysis of HB 1406, concerning associate development organizations, for the Technology, Economic Development, & Veterans Committee, with hearing date 1/29/25 and staff Martha Wehling. The brief summary says the bill removes additional reporting requirements for associate development organization contracts in counties with populations over 1,500,000, increases the annual allocation for urban and rural county contracts, and permits the matched portion to be provided through cash, in-kind, or a combination. The summary of bill sets a maximum of $500,000 per organization for urban counties and an in-kind match limit of 25 percent of the local match. It states the appropriation is none, with the fiscal note requested on January 20, 2025.

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Washington State                    BILL
House of Representatives
Office of Program Research   ANALYSIS
Technology, Economic Development, &
Veterans Committee
                                        HB 1406
Brief Description: Concerning associate development organizations.

Sponsors: Representatives Barnard, Ryu, Leavitt, Waters, Rule, Ybarra, Schmidt, Ramel, Paul,
    Reeves and Springer.


                                     Brief Summary of Bill
          • Removes additional reporting requirements for associate development
            organization contracts in counties with populations over 1,500,000.
          • Increases the annual allocation for urban and rural county associate
            development organization contracts.
          • Permits the matched portion of the allocation to be provided through
            cash, in-kind, or a combination.


Hearing Date: 1/29/25

Staff: Martha Wehling (786-7067).

Background:

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 increase
the support for and coordination of community and economic development services in
communities or regional areas. Commerce's 2023 annual report identifies contracts with 35
ADOs.




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

House Bill Analysis                             -1-                                         HB 1406
The ADO contracts are required to include areas of work for direct assistance and support for
regional economic research and planning efforts. Direct assistance is for companies in each
ADO's county needing support to stay in business, expand, or relocate. The support for regional
research and planning efforts implement target industry sector, cluster-based, and other
economic development strategies.

The amount of funds provided to a contracting ADO on an annual basis varies depending on
whether the county is urban or rural. A rural county is a county with a population density less
than 100 people per square mile or smaller than 225 square miles. Under the Office of Financial
Management's 2024 population density calculation, there are 30 rural counties. The remaining
nine nonrural counties are urban counties. ADO allocations are as follows:
    • ADOs serving urban counties receive a locally matched allocation of up to $.90 per capita,
      with a maximum of $300,000 per organization.
    • ADOs serving rural counties receive a locally matched allocation of up to $.90 per capita
      and a per county base allocation with a maximum of $40,000.

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. Counties with
populations more than 1,500,000 have additional reporting requirements related to small
businesses. All ADO reports are required to include certain employment data and financial
information. 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 Bill:

The amount of funds provided annually to an associate development organization (ADO) with a
contract with the Department of Commerce (Commerce) is adjusted:
   • ADOs serving urban counties receive a matched allocation, and a maximum of $500,000
      per organization.
   • ADOs serving rural counties receive a matched allocation, and a minimum per county
      base allocation of $85,000 and a maximum allocation of $150,000.

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

The additional reporting requirements related to small businesses for ADOs with populations
greater than 1,500,000 are eliminated.

Appropriation: None.

Fiscal Note: Requested on January 20, 2025.

Effective Date: The bill takes effect 90 days after adjournment of the session in which the bill is
passed.


House Bill Analysis                            -2-                                         HB 1406


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