wa-law.org > bill > 2025-26 > HB 2523 > Second Substitute
The legislature finds that in order to address racial, economic, and social disparities in communities across the state created by the historical design and enforcement of state and federal criminal laws and penalties for drug possession and use in Washington state, aggressive approaches and targeted resources to support local design and control of community-based responses to these outcomes are required.
The legislature further finds that it initially appropriated $1,000,000 for the development of a community reinvestment plan and $200,000,000 for implementation of the plan in the 2023-2025 fiscal biennium through the community reinvestment account in RCW 43.79.567. The legislature subsequently appropriated an additional $60,000,000 and $50,000,000 for the 2025-2027 and 2027-2029 fiscal biennia. The legislature finds that the initial phase of the program required use of the department of commerce's existing programs and networks to distribute money as quickly as possible. The department of commerce and the office of equity published a preliminary report on December 1, 2022, a community reinvestment plan report on September 19, 2023, and a community reinvestment plan implementation report in October 2025. The legislature intends to continue implementation of the community reinvestment plan, reporting on the plan, and updates to the plan.
The legislature recognizes that despite the development of a community reinvestment plan and reporting on implementation of the plan, existing programs and networks may not reach the people who are most affected by the historic laws and penalties for drug possession. Therefore, the legislature intends for the next phase of implementation to include policy direction for expenditure of the legislative appropriations, reporting on distribution of the appropriated funds, direction to update the community reinvestment plan at least every five years, and review of implementation of the program to date by the Washington state institute for public policy.
The community reinvestment account is created in the state treasury. Revenues to the account shall consist of appropriations and transfers by the legislature and all other moneys directed for deposit into the account. Moneys in the account may be spent only after appropriation.
Expenditures from the account may be used by the department of commerce for:
Economic development, which includes addressing wealth disparities to promote asset building such as homeownership and expanding access to financial resources including, but not limited to, grants and loans for small businesses and entrepreneurs, financial literacy training, and other small business training and support activities;
Civil and criminal legal assistance to provide postconviction relief and case assistance, including the expungement of criminal records and vacation of criminal convictions;
Community-based violence intervention and prevention services, which may include after-school programs focused on providing education and mentorship to youths;
Reentry services to facilitate successful transitions for persons formerly incarcerated in an adult correctional facility or juvenile residential facility in Washington; and
Agricultural and economic support and services available to historically marginalized communities.
An organization providing specialized services where fewer than five organizations statewide provide such services at no cost to clients is eligible to apply on a statewide basis rather than being limited to regional allocations.
For specialized legal services where fewer than five organizations statewide provide such services at no cost to clients, an organization that is not a "by and for community organization" may receive grants under this section if it:
Obtains a letter of support from at least one "by and for community organization" that directly serves the impacted communities;
Provides up to 15 percent of the grant funding to supporting "by and for community organizations" for community outreach, referrals, and oversight; and
Submits annual reports to the department demonstrating community impact and client demographic data showing service to the communities served.
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Funds appropriated to the community reinvestment account must be allocated in equal proportions across the following funding strategies:
Economic development under subsection (2)(a) of this section;
Civil and criminal legal assistance under subsection (2)(b) of this section;
Reentry services under subsection (2)(d) of this section;
Community-based violence intervention and prevention services under subsection (2)(c) of this section; and
Agricultural and economic support and services under subsection (2)(e) of this section.
The department of commerce may adjust allocations within a fiscal biennium only upon a determination, documented in the report required under section 3 of this act, that an equal allocation would result in unexpended funds or materially limit access for eligible communities.
The distribution of the grants under this section must be done in collaboration with "by and for community organizations" and consistent with the governor's executive order regarding consultation with federally recognized Indian tribes. "By and for community organizations" include, but are not limited to, those operated by and for Black, Latino, Native American, Asian, Native Hawaiian, and Pacific Islander communities. Grants must be allocated consistent with the criteria identified in section 3 of this act.
The department shall, in partnership with the office of equity, and "by and for community organizations", update the community reinvestment plan as needed, but no less frequently than every five years to identify the distribution of funds allocated to the community reinvestment account in RCW 43.79.567. The plan must be developed using a community-based participatory action research approach and include funding recommendations, programmatic guidelines, funding distribution, long-term economic benefits, monitoring, and evaluation.
At a minimum, the plan must address how the community reinvestment account funding will:
Expand program reach and stabilization outcomes;
Address racial, economic, and social disparities in communities across the state;
Produce significant long-term economic benefits to the state, a region of the state, or a particular community in the state;
Result in significant long-term economic benefits in the form of new jobs, job retention, increased personal wealth, or higher incomes for residents of the state or a particular community in the state;
Ensure that:
Projects or programs do not require continuing state support;
An expenditure will not supplant private investment;
An expenditure is accompanied by additional public or private investment;
Nonprofit, faith-based, and grassroots organizations that are "by and for community organizations" and are led by, governed by, and primarily serve communities experiencing persistent racial, economic, or social disparities are prioritized for competitive funding opportunities;
Programmatic guidelines encourage collaborative partnerships and system integration to maximize effectiveness and reduce duplication; and
Identify the criteria for the allocation of grants.
(A) Historically underserved or minority populations;
(B) "By and for community organizations"; and
(C) Populations in rural, regional, or geographically underserved areas of the state that experience barriers to access, historical representation, and resources.
ii. The department shall not award funds for economic development under RCW 43.79.567(2)(a) to an organization for a period longer than five years, unless the department documents in the report required under subsection (4) of this section that an allocation beyond five years is required to meet the objectives of this section for an organization.
In updating the plan, the department is encouraged to incorporate existing and ongoing work from relevant task forces and work groups including, but not limited to, the Washington statewide reentry council, the homeownership disparities workgroup, the economic justice alliance, and the small business resiliency network.
Within the appropriations provided for the program, the department shall submit a report consistent with RCW 43.01.036 to the governor and relevant committees of the legislature by June 30, 2028, and every two years thereafter. The report must include, at a minimum:
A detailed accounting of expenditures, including amounts awarded, geographic distribution, and funding strategy category;
An assessment of fund efficacy, including the extent to which funded programs advance the purposes of the community reinvestment plan;
An evaluation of program implementation, including barriers to access experienced by applicants and grantees and steps taken to address those barriers;
An analysis of economic impacts on target communities, including impacts on employment, income, wealth-building opportunities, housing stability, and community capacity, to the extent practicable;
Disaggregated data, where feasible, by race, ethnicity, geography, and population served, consistent with state data privacy standards; and
Recommendations for statutory, administrative, or budgetary changes to improve equity, effectiveness, and accessibility of the program.
The department shall submit each plan and report to the Washington state office of equity, the Washington state commission on African American affairs, the Washington state commission on Hispanic affairs, the governor's office of Indian affairs, the Washington state commission on Asian Pacific American affairs, the Washington state LGBTQ commission, and the office of minority and women's business enterprises.
The department shall collaborate with the office of equity to provide the services in this subsection within the appropriations provided to the department for the program.
The office of equity shall provide an independent analysis of each report. The analysis must assess whether implementation of the community reinvestment program is advancing racial equity, addressing historic harms, and reducing disparities in access to resources for communities disproportionately impacted by the enforcement of drug possession laws. The office of equity may include findings, concerns, and recommendations regarding program design, grantmaking practices, and outcomes.
The office of equity shall host the plan dashboard.
The office of equity shall convene, coordinate, and provide staff support to the state advisory team.
The office of equity shall provide and promote inclusive community engagement strategies that support the local advisory teams in their work, and serve as a resource for the local advisory teams in their community engagement efforts, including but not limited to plan and project development, selection, and implementation.
The department shall use the plan to guide the distribution of appropriated funds. The department must review and update the plan no less frequently than every five years, with the first update due in 2032.
For the purposes of this section, the following definitions apply:
"By and for community organizations" has the same meaning as used in RCW 43.79.567.
"Overburdened community" has the same meaning as defined in RCW 70A.02.010.
"Plan" means the community reinvestment plan.
"Underserved" has the same meaning as "underrepresented population" as defined in RCW 43.18A.010.
The department of commerce shall collaborate with the Washington state institute for public policy to provide the services in this section within the appropriations provided to the department of commerce for the community reinvestment program.
The Washington state institute for public policy must conduct a study researching, analyzing, and determining, to the extent practicable, the department of commerce's distribution of and the recipient organizations' use of, and the regional impact of, the funds allocated under the community reinvestment account in RCW 43.79.567.
In conducting the study, the Washington state institute for public policy may conduct fact-finding and stakeholder discussions with the department of commerce, the office of equity, organizations that received funds, and organizations that were eligible for funds but did not receive funds.
The department of commerce, the office of equity, and other relevant commissions must cooperate with the Washington state institute for public policy to facilitate access to data or other resources necessary to complete the work of this section.
By June 30, 2027, and in compliance with RCW 43.01.036, the Washington state institute for public policy shall submit a report to the appropriate committees of the legislature with the findings of its study under this section.
This section expires June 1, 2028.
Section 3 of this act takes effect July 1, 2027.