PRINTER'S NO. 1462
No. 1293 Session of 1997
INTRODUCED BY KIRKLAND, BELARDI, STURLA, MELIO, BEBKO-JONES,
BOSCOLA, ROEBUCK, ROBINSON, DALEY, PETRARCA, OLASZ,
C. WILLIAMS, WALKO, HENNESSEY, LAUGHLIN, YOUNGBLOOD, TRELLO,
RAMOS, STEELMAN, CIVERA, TRICH AND THOMAS, APRIL 10, 1997
REFERRED TO COMMITTEE ON LOCAL GOVERNMENT, APRIL 10, 1997
AN ACT
1 Establishing a distressed communities action program, making
2 grants to distressed communities to complement private
3 investment at distressed sites; and prescribing requirements
4 of and conditions for grants.
5 The General Assembly of the Commonwealth of Pennsylvania
6 hereby enacts as follows:
7 Section 1. Short title.
8 This act shall be known and may be cited as the Distressed
9 Communities Action Program Act.
10 Section 2. Legislative findings and policy.
11 (a) Findings.--The General Assembly finds and declares as
12 follows:
13 (1) There exist within distressed communities throughout
14 this Commonwealth industrial, residential and commercial
15 sites that have become blighted because of depressed economic
16 conditions resulting in:
17 (i) Plant closings and shutdowns.
18 (ii) Industries abandoning plans to expand or
1 relocate.
2 (iii) Facilities standing idle for several months or
3 years and subsequently becoming unusable through waste
4 and neglect.
5 (iv) Out-of-date and antiquated facilities being
6 passed over as unattractive distressed sites.
7 (2) Blighted distressed sites decrease motivation for
8 private investment in industry as a whole within and near
9 such sites.
10 (3) The condition of blighted industrial, residential
11 and commercial sites which are economically distressed is
12 such that rehabilitation or development by private enterprise
13 under existing law is economically prohibitive without
14 additional alternatives being provided to encourage the
15 stimulation of investment.
16 (4) The Commonwealth's present mechanism for stimulating
17 development of sites in severely economically distressed
18 communities is insufficient to alleviate these conditions.
19 (5) Commonwealth financing incentives in the form of
20 loans and grants are necessary for the rehabilitation and
21 development of economically distressed sites.
22 (6) The failure to rehabilitate and develop economically
23 distressed industrial, residential and commercial sites:
24 (i) Threatens public health and safety.
25 (ii) Contributes to unemployment and
26 underemployment.
27 (iii) Depreciates property values.
28 (iv) Reduces tax revenues.
29 (v) Is generally harmful to the social and economic
30 well-being of the communities in which such sites exist.
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1 (7) Increasing the number of rehabilitation and
2 development projects in blighted areas by providing capital
3 to stimulate private investment at distressed sites will
4 reduce or eliminate blight and act as a catalyst for further
5 private investment.
6 (8) Employing local residents will stimulate the local
7 economy.
8 (b) Policy.--It is hereby declared to be the policy of the
9 Commonwealth to promote the welfare, safety, morals, right to
10 gainful employment, business opportunities and general welfare
11 of the inhabitants of this Commonwealth and to promote the
12 public purpose of alleviating unemployment and underemployment
13 in distressed communities by providing financing incentives for
14 the rehabilitation and development of sites in blighted areas.
15 These purposes are hereby declared to be public uses for which
16 public money may be spent.
17 Section 3. Definitions.
18 The following words and phrases when used in this act shall
19 have the meanings given to them in this section unless the
20 context clearly indicates otherwise:
21 "Community." A city, borough, incorporated town, township or
22 home rule municipality other than a county.
23 "Department." The Department of Community and Economic
24 Development of the Commonwealth.
25 "Investor/developer." Any person, partnership, corporation
26 or other business entity that is engaged in the development, for
27 use by occupants, of one or more projects and that is determined
28 by the Department of Community and Economic Development to be
29 financially responsible to assume all obligations in the
30 acquisition, development, construction, leasing, sale, operation
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1 and financing, in whole or part, of a project.
2 "Local sponsor." The term includes the following:
3 (1) A municipality.
4 (2) An industrial and commercial development authority
5 organized pursuant to, or industrial development authority as
6 certified by the Department of Community and Economic
7 Development under the act of August 23, 1967 (P.L.251,
8 No.102), known as the Industrial and Commercial Development
9 Authority Law.
10 (3) An industrial development corporation as defined
11 under the act of May 17, 1956 (1955 P.L.1609, No.537), known
12 as the Pennsylvania Industrial Development Authority Act.
13 (4) A council of government organization or any
14 multimunicipal agency organization created under the act of
15 July 12, 1972 (P.L.762, No.180), referred to as the
16 Intergovernmental Cooperation Law.
17 (5) A municipal authority organized under the act of May
18 2, 1945 (P.L.382, No.164), known as the Municipality
19 Authorities Act of 1945.
20 (6) A redevelopment authority organized under the act of
21 May 24, 1945 (P.L.991, No.385), known as the Urban
22 Redevelopment Law.
23 (7) A local development district of the Appalachian
24 Regional Commission.
25 "Municipality." Any county, city, borough, incorporated
26 town, township or home rule municipality.
27 "Program." The Distressed Communities Action Program
28 established by this act.
29 "Project." Any of the following activities:
30 (1) The acquisition of land and buildings.
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1 (2) The demolition of buildings.
2 (3) The clearing and preparation of land.
3 (4) The construction of new industrial or manufacturing
4 facilities.
5 (5) The renovation of existing industrial or
6 manufacturing facilities.
7 (6) The cleanup of hazardous waste materials.
8 (7) The construction of new or the reconstruction of
9 existing infrastructure or utilities.
10 "Secretary." The Secretary of Community and Economic
11 Development of the Commonwealth.
12 Section 4. Establishment of program.
13 There is hereby established, under the direction of the
14 department, a program to be known as the Distressed Communities
15 Action Program for the purpose of making grants to local
16 sponsors in order to complement private investment by
17 investor/developers at blighted industrial and economically
18 distressed sites, to reuse dormant manufacturing and industrial
19 facilities and to create jobs.
20 Section 5. Project eligibility.
21 (a) Eligibility.--A local sponsor shall be eligible for a
22 grant under the program for a project that meets all the
23 following conditions:
24 (1) The project will create multitenant facilities for
25 use by manufacturing, industrial, research and development
26 enterprises or other enterprises that the department
27 determines will generate a substantial multiplier effect on
28 the regional economy. Enterprises to occupy the facilities
29 shall be found to be generating a substantial multiplier
30 effect if:
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1 (i) The enterprise offers employment comparable in
2 wages and benefits to industrial enterprise activity in
3 the region.
4 (ii) The enterprise provides goods or services which
5 add value to the goods or services of other businesses
6 important to the regional economy.
7 (iii) The enterprise performs services to customers
8 outside the region.
9 (2) The project will be carried out under the direction
10 and control of a responsible investor/developer, as
11 determined by the department.
12 (3) The project shall demonstrate the potential to
13 create, within two years after the completion of the project,
14 two employment opportunities for each $50,000 granted under
15 the program.
16 (4) The project shall reserve at least 50% of the jobs
17 for qualified low-income individuals within the community
18 where the construction, renovation or administration of the
19 project is situated.
20 (5) The investor/developer shall contribute equity to
21 the project in an amount equal to at least 5% of the total
22 eligible project cost.
23 (b) Maximum grant amount.--The maximum amount of grant funds
24 awarded for any project shall not exceed 25% of the total
25 eligible project cost and in no case shall the maximum amount of
26 any one grant exceed $2,000,000 in the year of the award nor a
27 total of $4,000,000 for any number of fiscal years. In addition,
28 the total amount of grant funds awarded in any one fiscal year
29 must be matched by private investment in an aggregate total
30 equal to or greater than three times the amount of grant funds
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1 awarded.
2 (c) Private match.--In addition to the equity required under
3 subsection (a), private match for the balance of project
4 financing shall be identified to the satisfaction of the
5 department. Private match may include other forms of private and
6 public financing, but in no case may funds derived directly from
7 Commonwealth sources be considered as private match. For the
8 purposes of this act, funds received by local sponsors from the
9 Commonwealth for pass-through to private companies or private
10 developers shall be considered Commonwealth funds.
11 Section 6. Application procedures.
12 (a) Establishment of procedures.--Application and
13 administration procedures shall be established by the secretary.
14 (b) Application submission.--The secretary shall receive
15 applications from local sponsors. Applications shall be
16 submitted to the secretary in the form and manner as the
17 department may require and shall be accompanied by such
18 additional documentation as the department may require.
19 (c) Application review.--Upon receipt of the application,
20 the secretary shall investigate and review the application and
21 either approve or disapprove the grant by proper action of the
22 department. The decision of the secretary shall be based upon
23 criteria which shall include, but not be limited to, any of the
24 following:
25 (1) The ability of the investor/developer to repay the
26 loan.
27 (2) The amount of private leverage in the project.
28 (3) The economic condition of the community.
29 (4) The severity of blight at the distressed site.
30 (5) The potential for job creation.
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1 (6) The certification to hire 50% of the project work
2 force from the local community.
3 (d) Action on application.--The secretary shall notify the
4 local sponsor of final approval or disapproval of the
5 application within a reasonable period of time following receipt
6 of the completed application and all accompanying documentation
7 required by the department.
8 Section 7. Conditions for award of grants.
9 (a) Loans to investor/developers.--All grants awarded to a
10 local sponsor for a project shall be lent by the local sponsor
11 to the investor/developer at an interest rate and term to be
12 determined by the department. All loans shall be evidenced by a
13 note executed by the investor/developer and shall be secured, at
14 a minimum, by a lien on the distressed site at the highest
15 available level of priority without jeopardizing private
16 financing for the project.
17 (b) Repayment.--
18 (1) Repayment of loan principal and payment of accrued
19 interest thereon shall be made to the department. However, if
20 the local sponsor submits a plan, approved by the department,
21 for carrying out future projects for public uses consistent
22 with the requirements of the program and if the local sponsor
23 has made a significant contribution to the original project,
24 as determined by the department, then repayment of loan
25 principal and payment of accrued interest thereon shall be
26 divided between the local sponsor and the department, with
27 60% thereof repaid to the local sponsor and 40% thereof
28 repaid to the department.
29 (2) All repayment of loan principal and payment of
30 accrued interest to the department shall be deposited in
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1 accordance with the terms of section 3(b) of the act of July
2 2, 1984 (P.L.512, No.104), known as the Pennsylvania Economic
3 Revitalization Act.
4 Section 8. Additional powers and duties of department.
5 (a) Rules and forms.--The department may promulgate such
6 guidelines, rules, regulations, statements of policy and forms
7 as may be necessary to implement and carry out the provisions of
8 this act.
9 (b) Professional services.--The department may obtain by
10 contract the temporary services of professional financial and
11 real estate analysts as it deems necessary in order to provide
12 adequate review of applications submitted for funding under the
13 program. Payment for such services may come from the
14 appropriation made for the program, provided that payment for
15 all such services does not exceed $100,000 in any fiscal year.
16 (c) Annual reports.--On or before September 30 of each year,
17 the secretary shall provide a report to the Secretary of the
18 Senate and to the Chief Clerk of the House of Representatives.
19 The report shall describe all relevant activities of the
20 department pursuant to this act and shall include the following:
21 (1) A list of local sponsors receiving grants from the
22 department and the amounts and terms of this assistance.
23 (2) The source and amount of private investment for each
24 project.
25 (3) Loan amounts repaid to the local sponsor or to the
26 department.
27 (4) Loans outstanding and balances due, including
28 delinquent payments.
29 (5) Jobs created at projects financed under the program.
30 (6) Certification to hire a minimum of 50% of the
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1 project work force from the community where the project work
2 is to be executed.
3 (7) Other relevant information, as determined by the
4 secretary.
5 Section 9. Time limit on award of grants.
6 No grants shall be awarded by the department to any eligible
7 applicant under this act after June 30, 1998.
8 Section 10. Conflict of interest.
9 No officer or employee of the Commonwealth or of the local
10 sponsor shall, either directly or indirectly, have an adverse
11 interest, as defined by the act of July 19, 1957 (P.L.1017,
12 No.451), known as the State Adverse Interest Act, in a project
13 financed with funds made available through the program.
14 Section 11. Effective date.
15 This act shall take effect immediately.
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