Concerning associate development organizations.

2025-2026 Regular Session Introduced by Noel Frame and 2 co-sponsors

Provides state funding for county-designated associate development organizations with capped per-organization/ per-county amounts and nonstate matching, tied to performance.

Effective date 7/27/2025.

Summary — SB 5677 (2025): Concerning associate development organizations

Status and effective date
- Chapter 392, 2025 Laws. Governor signed May 20, 2025. Effective July 27, 2025.
- Bill introduced Feb 6, 2025; passed both chambers (Senate concurred in House amendments Apr 21, 2025).

Purpose
- Adjusts how the Washington State Department of Commerce funds and manages contracts with county-designated associate development organizations (ADOs) and modifies certain reporting and matching requirements to support local economic development work.

Key provisions
1. Funding allocations (subject to appropriation)
- Urban counties: ADOs serving urban counties continue to receive a locally matched allocation (up to $0.90 per capita) but the per-organization cap is set at $300,000.
- Rural counties: ADOs in rural counties receive a per-county base allocation of $40,000 plus a locally matched allocation (up to $0.90 per capita).
- The allocations are awarded only to the extent funds are specifically appropriated by the Legislature.

Local match rules

The locally matched portion may include nonstate funds, cash, or in‑kind contributions.
The statute prohibits using the State General Fund for the locally matched allocation (i.e., the match must be non‑state funds).

Reporting and accountability

Contracting ADOs must continue to submit annual performance reports to Commerce (employment and economic measures, funds received, impacts, etc.), with data entered into Commerce’s web-based business information system and performance targets set through contracting.
The prior additional reporting requirement specific to the ADO serving a county with population greater than 1.5 million (extra small‑business measures) is eliminated.
Existing accountability provisions remain: remediation plans for underperforming ADOs, and possible one‑year termination of contracts for persistent nonperformance; Commerce reports to the Legislature biennially.

Who is affected
- ADOs (about 35 active contracting organizations as reported by Commerce) and the counties they serve (Washington has 39 counties; OFM classified ~30 as rural and nine as urban under 2024 density rules).
- Local governments, match funders (public/private), and the small businesses and communities supported by ADO services.
- The Department of Commerce, which administers contracts, collects data, and reports to the Legislature.

Potential impacts
- Provides stable baseline support (specified per‑county/organization amounts) contingent on appropriation, potentially strengthening ADO capacity—notably in rural counties that rely heavily on ADO assistance.
- Requires local matches to be from non‑state sources, which could encourage local/private leverage but may also pose challenges where local funds are constrained.
- Reduces reporting burden for the largest county ADO by removing the extra small-business reporting requirement, while maintaining performance and accountability frameworks.

Additional notes
- Changes to precise allocation ceilings/minima and reporting requirements evolved during committee amendments; the enacted text reflects the funding and match language described above and is contingent on legislative appropriation.