PRINTER'S NO. 1627
No. 1319 Session of 2003
INTRODUCED BY LEVDANSKY, MAY 5, 2003
REFERRED TO COMMITTEE ON COMMERCE, MAY 5, 2003
AN ACT
1 Amending the act of August 23, 1967 (P.L.251, No.102), entitled,
2 as amended, "An act providing for the incorporation as public
3 instrumentalities of the Commonwealth and as bodies corporate
4 and politic of industrial and commercial development
5 authorities for municipalities, counties and townships;
6 prescribing the rights, powers and duties of such authorities
7 hereafter incorporated; authorizing such authorities to
8 acquire, by gift or purchase, to construct, improve and
9 maintain industrial, specialized, or commercial development
10 projects including projects for the elimination or prevention
11 of blight and the control of air and water pollution, and to
12 borrow money and issue bonds therefor; providing for the
13 payment of such bonds and giving security therefor, and
14 prescribing the rights of the holders of such bonds;
15 authorizing the lease or sale of industrial, specialized, or
16 commercial development projects to industrial, specialized,
17 or commercial enterprises; authorizing any county,
18 municipality or township to transfer or convey to such
19 authorities, any facilities or property available for
20 industrial, specialized, or commercial development projects;
21 exempting the property and securities of such authorities
22 from taxation; authorizing such authorities to enter into
23 contracts with and to accept grants from the Federal
24 Government or any agency thereof; and providing for approval
25 by the Secretary of Commerce of the proceedings relating to
26 industrial, specialized, or commercial development projects
27 of such authorities," further providing for definitions, for
28 financing authority indebtedness and financing and for
29 prohibitions; establishing the Commonwealth Tax Increment
30 Financing Loan Guarantee Program and the Pennsylvania
31 Opportunity Fund Oversight Committee; providing for
32 reporting; making an appropriation; and making editorial
33 changes.
1 The General Assembly of the Commonwealth of Pennsylvania
2 hereby enacts as follows:
3 Section 1. The definitions of "department" and "secretary"
4 in section 3 of the act of August 23, 1967 (P.L.251, No.102),
5 known as the Economic Development Financing Law, amended
6 December 17, 1993 (P.L.490, No.74), are amended and the section
7 is amended by adding a definition to read:
8 Section 3. Definitions.--As used in this act:
9 * * *
10 "Department" means the Department of [Commerce] Community and
11 Economic Development of the Commonwealth.
12 * * *
13 "Oversight committee" means the Pennsylvania Opportunity Fund
14 Oversight Committee established in section 15.4.
15 * * *
16 "Secretary" means the Secretary of [Commerce] Community and
17 Economic Development of the Commonwealth.
18 * * *
19 Section 2. Sections 6.3(a), 6.4 and 15.2 of the act, amended
20 or added December 17, 1993 (P.L.490, No.74), are amended to
21 read:
22 Section 6.3. Financing Authority Indebtedness.--(a) The
23 financing authority shall have the power and is hereby
24 authorized to issue its limited obligation revenue bonds and
25 other types of financing as in the judgment of the financing
26 authority shall be necessary to provide sufficient funds for any
27 related or unrelated projects: (i) provided that the issuance by
28 the financing authority of taxable or tax-exempt bonds on behalf
29 of projects comprising industrial facilities, commercial
30 facilities, pollution control facilities, energy conversion
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1 facilities, energy producing facilities and disaster relief
2 project facilities, other than projects to be funded by the
3 oversight committee, shall have been authorized by an industrial
4 and commercial development authority or a group of industrial
5 and commercial development authorities or by an industrial
6 development agency or a group of industrial and development
7 agencies; (ii) further provided that the financing authority may
8 issue taxable or tax-exempt bonds on behalf of interagency
9 projects other than projects to be funded by the oversight
10 committee only if the applicant has first applied to the
11 Pennsylvania Infrastructure Investment Authority for financing
12 under the provisions of the act of March 1, 1988 (P.L.82,
13 No.16), known as the "Pennsylvania Infrastructure Investment
14 Authority Act," and the Pennsylvania Infrastructure Investment
15 Authority in writing refers the applicant to the financing
16 authority to finance all or part of the interagency project in
17 accordance with this act; and (iii) further provided that the
18 issuance by the financing authority of taxable or tax-exempt
19 bonds for a public facility other than projects to be funded by
20 the oversight committee, interagency projects and projects for
21 roads and transportation facilities and transportation systems
22 of every kind shall have been authorized by a municipality,
23 municipal authority or Commonwealth agency and only if both the
24 applicant and the financing authority have determined that the
25 cost of obtaining the financing for the public facility will be
26 reduced through the issuance of bonds through the financing
27 authority. For purposes of the determination required in this
28 subsection, any financing for a public facility that the
29 financing authority reasonably believes could have received a
30 rating of "A" or better from either Moody's Investors Service or
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1 Standard & Poor's Corporation shall be presumed not to be
2 eligible for financing by the financing authority. The financing
3 authority is authorized and empowered to use the proceeds of any
4 bonds issued for the making of loans, purchasing loans,
5 mortgages, security interests or loan participations and paying
6 all incidental expenses in connection therewith, paying expenses
7 of authorizing and issuing the bonds, paying interest on the
8 bonds until revenues thereof are available in sufficient amounts
9 and funding the reserves as the financing authority deems
10 necessary and desirable.
11 * * *
12 Section 6.4. Financing Authority Loans.--(a) The financing
13 authority shall ascertain to its satisfaction that:
14 (1) Firm commitments satisfactory to the financing authority
15 have been obtained from responsible financial sources, which may
16 include a Federal agency, project applicant or the project user,
17 for the portion of project costs in excess of any loan or other
18 financing requested from the financing authority.
19 (2) [A] Except for projects to be funded by the oversight
20 committee, a firm commitment satisfactory to the financing
21 authority from the project applicant or project user has been
22 obtained to lease or use the project after acquisition is
23 completed.
24 (3) [The] Except for projects to be funded by the oversight
25 committee, the project user may reasonably be expected to comply
26 with the terms of such lease or use.
27 (4) [The] Except for projects to be funded by the oversight
28 committee, the project complies with all rules and regulations
29 of the financing authority, if any.
30 (b) In addition to other provisions of this section limiting
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1 the power of the financing authority to make loans or provide
2 other financing in respect to a particular project, no funds of
3 the financing authority shall be used in respect of any project
4 if the financing authority would be required to operate, service
5 or maintain the project pursuant to any lease or other agreement
6 except upon foreclosure or except upon the occurrence of a
7 default in the payment or terms of any loan made. Nothing shall
8 prevent the financing authority from transferring such property
9 to the project applicant, project user or either of their
10 designees at the end of the term of such financing.
11 Section 15.2. Prohibition.--(a) Except as provided herein,
12 no Commonwealth agency under the control of the executive branch
13 shall be a project applicant under this act[. Operating expenses
14 of any Commonwealth agency under the control of the executive
15 branch are not an eligible project cost.] except that the
16 department may be a project applicant for a project funded by
17 the oversight committee.
18 (b) The Department of Public Welfare may be a project
19 applicant to provide for the conversion of medical assistance
20 services from a fee-for-service basis to a prepaid managed-care
21 basis subject to prior approval of this conversion mechanism by
22 the Health Care Financing Agency of the Federal Department of
23 Health and Human Services and prior notice of project details
24 and Federal approval to the chairman and minority chairman of
25 the Senate Appropriations Committee and the chairman and
26 minority chairman of the House Appropriations Committee. Maximum
27 term of the bonds, notes or other evidences of indebtedness
28 issued for this project shall be five years.
29 Section 3. The act is amended by adding sections to read:
30 Section 15.3. Commonwealth Tax Increment Financing Loan
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1 Guarantee Program.--The Commonwealth Tax Increment Financing
2 Loan Guarantee Program shall provide loan guarantees to issuers
3 of bonds or other indebtedness for tax increment financing in
4 accordance with the act of July 11, 1990 (P.L.465, No.113),
5 known as the "Tax Increment Financing Act."
6 (1) The oversight committee may establish a loan guarantee
7 procedure for the purpose of this program.
8 (2) The oversight committee may commit up to one hundred
9 million dollars ($100,000,000) in first round funds to the loan
10 guarantee procedure for this program.
11 (3) Before any project is approved under this clause, the
12 oversight committee shall develop written guidelines.
13 Section 15.4. Oversight Committee.--(a) There is
14 established in the financing board the Pennsylvania Opportunity
15 Fund Oversight Committee. The oversight committee shall consist
16 of the following:
17 (1) The Governor.
18 (2) The State Treasurer.
19 (3) The Secretary of the Budget.
20 (4) The secretary.
21 (5) The Secretary of Banking.
22 (6) Four members of the General Assembly appointed as
23 follows:
24 (i) One member appointed by the President pro tempore of the
25 Senate.
26 (ii) One member appointed by the Minority Leader of the
27 Senate.
28 (iii) One member appointed by the Speaker of the House of
29 Representatives.
30 (iv) One member appointed by the Minority Leader of the
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1 House of Representatives.
2 (7) Four members appointed by the Governor.
3 (b) Terms of members shall be as follows:
4 (1) A member under subsection (a)(6) shall serve at the
5 pleasure of the appointing authority.
6 (2) Two members under subsection (a)(7) shall serve terms of
7 four years from appointment and until a successor is appointed,
8 and two members under subsection (a) shall serve terms of two
9 years from appointment and until a successor is appointed.
10 (c) Members of the oversight committee shall serve without
11 compensation but shall be reimbursed for actual and reasonable
12 expenses incurred in the performance of their official duties.
13 (d) The Governor shall serve as chairperson of the oversight
14 committee, or the Governor may designate another member to serve
15 as chairperson. The members of the oversight committee shall
16 select one member to serve as secretary.
17 (e) A designee designated by a member under subsection (a)
18 (1) through (6) may vote and otherwise act on behalf of the
19 member. The designation must be in writing and be delivered to
20 the oversight committee. The designation shall continue in
21 effect until revoked or amended in writing.
22 (f) A majority of the members of the oversight committee
23 then serving shall constitute a quorum of the oversight
24 committee. Only a member or a designee who is physically present
25 at a meeting or able to participate fully in the deliberations
26 by appropriate telecommunications means shall count toward a
27 quorum of the oversight committee.
28 Section 15.5. Powers and Duties of Oversight Committee.--(a)
29 The oversight committee shall have the powers and duties
30 delegated to it by the financing authority. In addition, the
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1 oversight committee shall have the following powers and duties:
2 (1) To authorize and direct the issuance of bonds by the
3 financing authority, which, upon authorization by the oversight
4 committee, shall be deemed for all purposes to have been issued
5 by resolution of the financing authority.
6 (2) To control and manage, invest and reinvest money
7 received from bond financing, from repayments and redeposits or
8 from any other source derived and dedicated for use in programs
9 financed by the oversight committee and for all expenses
10 associated with the program. Funds may be deposited by the
11 oversight committee in banks or trust companies in special
12 accounts for use by the oversight committee as set forth in this
13 clause, including the use of interest earned on the accounts.
14 Money in the accounts shall be paid out on order of the
15 oversight committee. Funds deposited by the oversight committee
16 in special accounts in banks or trust companies may be prudently
17 invested in any of the following:
18 (i) Obligations of the United States Government, its
19 agencies and instrumentalities, which have a liquid market with
20 a readily determinable market value.
21 (ii) Certificates of deposit and other evidences of deposit
22 at financial institutions, bankers' acceptances and commercial
23 paper rated in the highest tier, for example, A1, P1, F1 or D1
24 or higher, by a nationally recognized rating agency.
25 (iii) Obligations of State and local governments, and of
26 public authorities which are rated in one of the top three
27 rating categories by a nationally recognized rating agency.
28 (iv) Repurchase agreements underlying purchased securities
29 of which consist of investments set forth in clause (1), (2) or
30 (3).
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1 (v) Money market funds:
2 (A) which are regulated by the Securities Exchange
3 Commission having aggregate assets of at least fifty thousand
4 dollars ($50,000) on the date of investment; and
5 (B) the portfolio of which consists only of dollar-
6 denominated securities.
7 (3) To hold, purchase, sell, lend, assign, transfer or
8 dispose of any category of securities and investments, in which
9 money dedicated for use in programs financed by the oversight
10 committee has been invested, and the proceeds of such
11 investments.
12 (4) To make equity capital available to early to mid-stage
13 companies located within this Commonwealth that operate within
14 targeted growth segments of the economy and to provide for the
15 repayment of such capital.
16 (5) To make loans and other capital available to private
17 developers, redevelopers or other real estate development
18 entities engaged in real estate projects for redevelopment or
19 revitalization of real estate located within this Commonwealth
20 and to provide for the repayment of such loans and investments.
21 (6) To make loans and grants to assist in the acquisition
22 and preparation of sites for future development. Loans and
23 grants may be made by providing funds to the department to
24 administer on behalf of the oversight committee.
25 (7) To use funds to guarantee tax increment financing
26 projects.
27 (8) To make loans or to guarantee loans to promote
28 agriculture and tourism in this Commonwealth.
29 (b) Actions taken by the oversight committee shall not be
30 subject to review by the financing board.
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1 (c) In the exercise of its powers and duties, the oversight
2 committee shall exercise that degree of judgment, skill and care
3 under the circumstances then prevailing that persons of
4 prudence, discretion and intelligence, that are familiar with
5 investment matters, exercise in the management of their own
6 affairs, not in regard to speculation but in regard to permanent
7 disposition of the funds, considering the probable income to be
8 derived from the investments and the probable safety of their
9 capital.
10 (d) The members of the oversight committee and their
11 professional personnel shall stand in a fiduciary relationship
12 to the Commonwealth and its citizens regarding the investments
13 of the money of the fund and shall not profit, either directly
14 or indirectly, with respect thereto.
15 Section 15.6. Annual Report.--By November 30, 2004, and
16 annually thereafter, the oversight committee shall submit a
17 report to the Governor and to the chair and minority chair of
18 the Appropriations Committee of the Senate and the chair and
19 minority chair of the Appropriations Committee of the House of
20 Representatives. The report shall provide an analysis of the
21 status of the current investments and transactions made by the
22 oversight committee or the department over the previous fiscal
23 year for the program.
24 Section 15.7. Reporting of Tax Increment Financing
25 Projects.--The department is authorized to gather information
26 relating to the issuance of tax increment financing bonds within
27 this Commonwealth for projects that are in existence at the time
28 of the effective date of this section and for projects that come
29 into existence thereafter. Issuers of tax increment financing
30 bonds are directed to provide information to the department upon
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1 request. The department is authorized to take whatever steps are
2 necessary to obtain the information. The department shall
3 provide the information it has collected to the oversight
4 committee for inclusion in the annual report under section 15.6.
5 Section 4. The sum of $12,000,000, or as much thereof as may
6 be necessary, is hereby appropriated to the Pennsylvania
7 Economic Development Financing Authority and allocated to the
8 Pennsylvania Opportunity Fund Oversight Committee for the fiscal
9 year July 1, 2003, to June 30, 2004, to carry out the provisions
10 of this act and any other act which confers financing authority
11 upon the committee.
12 Section 5. This act shall take effect July 1, 2003, or
13 immediately, whichever is later.
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