House Bill Analysis — ESSB 5677, Associate Development Organizations

Summary

A House Bill Analysis of ESSB 5677 from the Washington State House of Representatives Office of Program Research for the Technology, Economic Development, & Veterans Committee, with a hearing date of 3/18/25. The brief description is "Concerning associate development organizations," and the sponsor is the Senate Committee on Business, Financial Services & Trade. The summary of the bill says associate development associations serving urban counties would receive a maximum of $500,000 per organization and a matched allocation, and those serving rural counties a minimum base allocation of $85,000 and a maximum of $150,000. It lists Appropriation: None and a fiscal note requested on March 10, 2025.

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Washington State                    BILL
House of Representatives
Office of Program Research   ANALYSIS
Technology, Economic Development, &
Veterans Committee
                                      ESSB 5677
Brief Description: Concerning associate development organizations.

Sponsors: Senate Committee on Business, Financial Services & Trade (originally sponsored by
    Senators Cortes, Frame, Riccelli and Schoesler).


                         Brief Summary of Engrossed Substitute Bill
          • Increases the maximum allocation for associate development
            associations in urban counties to $500,000, and sets a minimum of
            $85,000 and maximum of $150,000 for associate development
            associations in rural counties.
          • Permits the matched portion of the annual allocation for associate
            development association contracts to be provided through cash, in-kind,
            or a combination.
          • Removes additional reporting requirements for associate development
            organization contracts in counties with populations over 1.5 million.
          • Requires all associate development organizations to meet federal
            standards for maintaining, collecting, and presenting demographic data
            in their annual reports.


Hearing Date: 3/18/25

Staff: Martha Wehling (786-7067).

Background:




     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-                                       ESSB 5677
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.

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:
    • Associate development associations serving urban counties receive a locally matched
      allocation of up to 90 cents per capita, with a maximum of $300,000 per organization.
    • Associate development associations serving rural counties receive a maximum per county
      base allocation of $40,000 and a locally matched allocation of up to 90 cents 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. Counties with
populations more than 1.5 million 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 association with a contract
with the Department of Commerce (Commerce) is adjusted:
   • Associate development associations serving urban counties receive a maximum of
      $500,000 per organization and a matched allocation.
   • Associate development associations serving rural counties receive a minimum per county
      base allocation of $85,000 and a maximum allocation of $150,000, and a matched
      allocation.

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 associate development


House Bill Analysis                           -2-                                     ESSB 5677
organizations (ADOs) with populations greater than 1.5 million are eliminated. All ADOs are
required to include demographic information in their annual reports that meets the federal Office
of Management and Budget standards for maintaining, collecting, and presenting federal data.
The ADOs and Commerce may consult with State Ethnic Commissions and the Governor's
Office of Indian Affairs for technical assistance in complying with those standards.

Appropriation: None.

Fiscal Note: Requested on March 10, 2025.

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




House Bill Analysis                            -3-                                      ESSB 5677


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