Washington, D.C. - U.S. Rep. Rick Larsen (WA-02) announced today that changes to the HUBZone program allow Skagit County to retain its status as a federal Historically Underutilized Business Zone (HUBZone). HUBZone status is a competitive advantage because three percent of all federal contracts must be procured from businesses within HUBZones. Skagit County lost its HUBZone status in June 2004, despite the area’s high unemployment rate, due to a flawed federal formula. Larsen introduced the HUBZone Extension Act of 2004 to fix the flaw. His efforts resulted in changes to the HUBZone program included in the Fiscal Year 2005 Omnibus Appropriations bill.

“The extended HUBZone means stronger businesses and more jobs in Skagit County,” Larsen said. “Skagit County needed to keep its status, not lose it based on a flawed federal formula. I’m pleased that we were able to fix the problem and keep Skagit County’s HUBZone status.”

Skagit County lost its HUBZone status in June 2004 because the state’s unemployment rate had risen sharply, making Skagit County ineligible since its unemployment rate no longer met the criteria of being higher than 140 percent of the statewide unemployment average. Larsen’s bill would have fixed the redesignation problem by extending, for up to three years, the HUBZone status for an area whose state unemployment rate increased after it was designated.

The Fiscal Year 2005 Omnibus Appropriations bill made several changes to the HUBZone program. The changes include a provision to allow all counties losing their status to keep their HUBZone status until the results of the 2010 Census are released to the public, or to keep their status until at least three years after a study into the eligibility rules that must be completed no later than 2008. Whether the Small Business Administration uses either the Census deadline or the study deadline, Skagit County will likely keep its HUBZone status until at least 2010.

“These changes will give Skagit County at least six more years of HUBZone status,” Larsen said. “The law also directs the Small Business Administration to take another look at HUBZone eligibility rules. We need to ensure that the rules are fair to areas like Skagit County that lost its status simply because the state’s unemployment rate rose and started catching up with the county.”

The Economic Development Association of Skagit County approached Larsen about the problem in March. The Congressman worked with the economic development community to craft a legislative solution to the HUBZone redesignation process.

Don Wick, Executive Director of the Economic Development Association of Skagit County, spoke about the program changes.

“Congressman Larsen’s efforts to help Skagit County and other at-risk HUBZones keep their status shows that he understands the importance of creating and keeping good jobs in our communities,” Wick said. “We are fortunate to have an advocate like Rick who fights for Skagit County businesses and their employees.”

Skagit County businesses expressed excitement after hearing that the HUBZone status had been reinstated.

Leslie Kohlbry Smith, Operations Manager at Workskiff, Inc., Burlington, WA, said, “This news represents a call to action for additional government support of small businesses located in economically disadvantaged areas across our country.  As an aluminum boat manufacturer here in the Pacific Northwest, we want to continue to provide high-wage manufacturing jobs, benefits and training to our community members who need it most. Now is the time to insist federal buyers designate HUBZone small businesses as a priority in their purchasing.”

The U.S. SBA oversees the HUBZone Empowerment Contracting program which began in 1997. SBA's HUBZone program promotes economic development and employment growth in distressed areas by providing access to more federal contracting opportunities.

Skagit County earned HUBZone designation status in 1999 because it was a non-metropolitan county with an unemployment rate of more than 140 percent of the statewide average.

To qualify as a HUBZone business, small businesses must be in a designated HUBZone, be U.S.-owned and have 35 percent of employees living within the HUBZone.

Larsen represents the 2nd Congressional District that includes Skagit County in the U.S. House of Representatives. In Congress Larsen serves on the bipartisan HUBZone Caucus, joining with other Members of Congress to represent HUBZone communities in Congress.