PRINTER'S NO. 1628
No. 1320 Session of 2003
INTRODUCED BY TANGRETTI, 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 a Pennsylvania Opportunity Fund
30 Program and the Pennsylvania Opportunity Fund Oversight
31 Committee; providing for reporting; making an appropriation;
32 and making editorial changes.
33 The General Assembly of the Commonwealth of Pennsylvania
1 hereby enacts as follows:
2 Section 1. The definitions of "department" and "secretary"
3 in section 3 of the act of August 23, 1967 (P.L.251, No.102),
4 known as the Economic Development Financing Law, amended
5 December 17, 1993 (P.L.490, No.74), are amended and the section
6 is amended by adding a definition to read:
7 Section 3. Definitions.--As used in this act:
8 * * *
9 "Department" means the Department of [Commerce] Community and
10 Economic Development of the Commonwealth.
11 * * *
12 "Oversight committee" means the Pennsylvania Opportunity Fund
13 Oversight Committee established in section 15.4.
14 * * *
15 "Secretary" means the Secretary of [Commerce] Community and
16 Economic Development of the Commonwealth.
17 * * *
18 Section 2. Sections 6.3(a), 6.4 and 15.2 of the act, amended
19 or added December 17, 1993 (P.L.490, No.74), are amended to
20 read:
21 Section 6.3. Financing Authority Indebtedness.--(a) The
22 financing authority shall have the power and is hereby
23 authorized to issue its limited obligation revenue bonds and
24 other types of financing as in the judgment of the financing
25 authority shall be necessary to provide sufficient funds for any
26 related or unrelated projects: (i) provided that the issuance by
27 the financing authority of taxable or tax-exempt bonds on behalf
28 of projects comprising industrial facilities, commercial
29 facilities, pollution control facilities, energy conversion
30 facilities, energy producing facilities and disaster relief
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1 project facilities, other than projects to be funded by the
2 oversight committee, shall have been authorized by an industrial
3 and commercial development authority or a group of industrial
4 and commercial development authorities or by an industrial
5 development agency or a group of industrial and development
6 agencies; (ii) further provided that the financing authority may
7 issue taxable or tax-exempt bonds on behalf of interagency
8 projects other than projects to be funded by the oversight
9 committee only if the applicant has first applied to the
10 Pennsylvania Infrastructure Investment Authority for financing
11 under the provisions of the act of March 1, 1988 (P.L.82,
12 No.16), known as the "Pennsylvania Infrastructure Investment
13 Authority Act," and the Pennsylvania Infrastructure Investment
14 Authority in writing refers the applicant to the financing
15 authority to finance all or part of the interagency project in
16 accordance with this act; and (iii) further provided that the
17 issuance by the financing authority of taxable or tax-exempt
18 bonds for a public facility other than projects to be funded by
19 the oversight committee, interagency projects and projects for
20 roads and transportation facilities and transportation systems
21 of every kind shall have been authorized by a municipality,
22 municipal authority or Commonwealth agency and only if both the
23 applicant and the financing authority have determined that the
24 cost of obtaining the financing for the public facility will be
25 reduced through the issuance of bonds through the financing
26 authority. For purposes of the determination required in this
27 subsection, any financing for a public facility that the
28 financing authority reasonably believes could have received a
29 rating of "A" or better from either Moody's Investors Service or
30 Standard & Poor's Corporation shall be presumed not to be
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1 eligible for financing by the financing authority. The financing
2 authority is authorized and empowered to use the proceeds of any
3 bonds issued for the making of loans, purchasing loans,
4 mortgages, security interests or loan participations and paying
5 all incidental expenses in connection therewith, paying expenses
6 of authorizing and issuing the bonds, paying interest on the
7 bonds until revenues thereof are available in sufficient amounts
8 and funding the reserves as the financing authority deems
9 necessary and desirable.
10 * * *
11 Section 6.4. Financing Authority Loans.--(a) The financing
12 authority shall ascertain to its satisfaction that:
13 (1) Firm commitments satisfactory to the financing authority
14 have been obtained from responsible financial sources, which may
15 include a Federal agency, project applicant or the project user,
16 for the portion of project costs in excess of any loan or other
17 financing requested from the financing authority.
18 (2) [A] Except for projects to be funded by the oversight
19 committee, a firm commitment satisfactory to the financing
20 authority from the project applicant or project user has been
21 obtained to lease or use the project after acquisition is
22 completed.
23 (3) [The] Except for projects to be funded by the oversight
24 committee, the project user may reasonably be expected to comply
25 with the terms of such lease or use.
26 (4) [The] Except for projects to be funded by the oversight
27 committee, the project complies with all rules and regulations
28 of the financing authority, if any.
29 (b) In addition to other provisions of this section limiting
30 the power of the financing authority to make loans or provide
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1 other financing in respect to a particular project, no funds of
2 the financing authority shall be used in respect of any project
3 if the financing authority would be required to operate, service
4 or maintain the project pursuant to any lease or other agreement
5 except upon foreclosure or except upon the occurrence of a
6 default in the payment or terms of any loan made. Nothing shall
7 prevent the financing authority from transferring such property
8 to the project applicant, project user or either of their
9 designees at the end of the term of such financing.
10 Section 15.2. Prohibition.--(a) Except as provided herein,
11 no Commonwealth agency under the control of the executive branch
12 shall be a project applicant under this act[. Operating expenses
13 of any Commonwealth agency under the control of the executive
14 branch are not an eligible project cost.] except that the
15 department may be a project applicant for a project funded by
16 the oversight committee.
17 (b) The Department of Public Welfare may be a project
18 applicant to provide for the conversion of medical assistance
19 services from a fee-for-service basis to a prepaid managed-care
20 basis subject to prior approval of this conversion mechanism by
21 the Health Care Financing Agency of the Federal Department of
22 Health and Human Services and prior notice of project details
23 and Federal approval to the chairman and minority chairman of
24 the Senate Appropriations Committee and the chairman and
25 minority chairman of the House Appropriations Committee. Maximum
26 term of the bonds, notes or other evidences of indebtedness
27 issued for this project shall be five years.
28 Section 3. The act is amended by adding sections to read:
29 Section 15.3. Growth Sector Program.--(a) A Pennsylvania
30 Opportunity Fund Program entitled the Growth Sector Program is
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1 established within the financing authority.
2 (1) The Growth Sector Program shall support the creation and
3 growth of new employment through equity capital provided through
4 professional fund managers under contractual agreement with the
5 oversight committee to promote company start-ups and expansions.
6 (i) The oversight committee may make equity capital
7 available which meets the standard of prudence set forth in
8 section 15.5(d) by providing funds to partnerships that make
9 investments in a business:
10 (A) which is expected to grow substantially in the future
11 and;
12 (B) in which the expected returns on investment are to come
13 predominantly from increases in value of interests which are not
14 in nor secured by real estate.
15 (ii) The oversight committee may invest in one or more
16 partnerships or comparable investment entities if:
17 (A) the investment guidelines and strategies of each
18 partnership or investment entity require that all investments
19 will be made in companies located primarily in this Commonwealth
20 or in companies willing to relocate significant business
21 operations to this Commonwealth; and
22 (B) the partnership or investment entity agrees to operate
23 under a prudent expert standard of care.
24 (iii) The liability of the oversight committee shall be
25 limited to the amount of its investment under this clause.
26 (iv) The oversight committee may commit up to two hundred
27 fifty million dollars ($250,000,000) in first round funds to
28 this program if the oversight committee investment is matched on
29 at least a dollar-for-dollar basis with private funds.
30 (v) The oversight committee shall establish the types of
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1 project investments which may be made by a partnership or
2 investment entity utilizing oversight committee funds.
3 Section 15.4. Oversight Committee.--(a) There is
4 established in the financing board the Pennsylvania Opportunity
5 Fund Oversight Committee. The oversight committee shall consist
6 of the following:
7 (1) The Governor.
8 (2) The State Treasurer.
9 (3) The Secretary of the Budget.
10 (4) The secretary.
11 (5) The Secretary of Banking.
12 (6) Four members of the General Assembly appointed as
13 follows:
14 (i) One member appointed by the President pro tempore of the
15 Senate.
16 (ii) One member appointed by the Minority Leader of the
17 Senate.
18 (iii) One member appointed by the Speaker of the House of
19 Representatives.
20 (iv) One member appointed by the Minority Leader of the
21 House of Representatives.
22 (7) Four members appointed by the Governor.
23 (b) Terms of members shall be as follows:
24 (1) A member under subsection (a)(6) shall serve at the
25 pleasure of the appointing authority.
26 (2) Two members under subsection (a)(7) shall serve terms of
27 four years from appointment and until a successor is appointed,
28 and two members under subsection (a) shall serve terms of two
29 years from appointment and until a successor is appointed.
30 (c) Members of the oversight committee shall serve without
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1 compensation but shall be reimbursed for actual and reasonable
2 expenses incurred in the performance of their official duties.
3 (d) The Governor shall serve as chairperson of the oversight
4 committee, or the Governor may designate another member to serve
5 as chairperson. The members of the oversight committee shall
6 select one member to serve as secretary.
7 (e) A designee designated by a member under subsection (a)
8 (1) through (6) may vote and otherwise act on behalf of the
9 member. The designation must be in writing and be delivered to
10 the oversight committee. The designation shall continue in
11 effect until revoked or amended in writing.
12 (f) A majority of the members of the oversight committee
13 then serving shall constitute a quorum of the oversight
14 committee. Only a member or a designee who is physically present
15 at a meeting or able to participate fully in the deliberations
16 by appropriate telecommunications means shall count toward a
17 quorum of the oversight committee.
18 Section 15.5. Powers and Duties of Oversight Committee.--(a)
19 The oversight committee shall have the powers and duties
20 delegated to it by the financing authority. In addition, the
21 oversight committee shall have the following powers and duties:
22 (1) To authorize and direct the issuance of bonds by the
23 financing authority, which, upon authorization by the oversight
24 committee, shall be deemed for all purposes to have been issued
25 by resolution of the financing authority.
26 (2) To control and manage, invest and reinvest money
27 received from bond financing, from repayments and redeposits or
28 from any other source derived and dedicated for use in programs
29 financed by the oversight committee and for all expenses
30 associated with the program. Funds may be deposited by the
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1 oversight committee in banks or trust companies in special
2 accounts for use by the oversight committee as set forth in this
3 clause, including the use of interest earned on the accounts.
4 Money in the accounts shall be paid out on order of the
5 oversight committee. Funds deposited by the oversight committee
6 in special accounts in banks or trust companies may be prudently
7 invested in any of the following:
8 (i) Obligations of the United States Government, its
9 agencies and instrumentalities, which have a liquid market with
10 a readily determinable market value.
11 (ii) Certificates of deposit and other evidences of deposit
12 at financial institutions, bankers' acceptances and commercial
13 paper rated in the highest tier, for example, A1, P1, F1 or D1
14 or higher, by a nationally recognized rating agency.
15 (iii) Obligations of State and local governments, and of
16 public authorities which are rated in one of the top three
17 rating categories by a nationally recognized rating agency.
18 (iv) Repurchase agreements underlying purchased securities
19 of which consist of investments set forth in clause (1), (2) or
20 (3).
21 (v) Money market funds:
22 (A) which are regulated by the Securities Exchange
23 Commission having aggregate assets of at least fifty thousand
24 dollars ($50,000) on the date of investment; and
25 (B) the portfolio of which consists only of dollar-
26 denominated securities.
27 (3) To hold, purchase, sell, lend, assign, transfer or
28 dispose of any category of securities and investments, in which
29 money dedicated for use in programs financed by the oversight
30 committee has been invested, and the proceeds of such
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1 investments.
2 (4) To make equity capital available to early to mid-stage
3 companies located within this Commonwealth that operate within
4 targeted growth segments of the economy and to provide for the
5 repayment of such capital.
6 (5) To make loans and other capital available to private
7 developers, redevelopers or other real estate development
8 entities engaged in real estate projects for redevelopment or
9 revitalization of real estate located within this Commonwealth
10 and to provide for the repayment of such loans and investments.
11 (6) To make loans and grants to assist in the acquisition
12 and preparation of sites for future development. Loans and
13 grants may be made by providing funds to the department to
14 administer on behalf of the oversight committee.
15 (7) To use funds to guarantee tax increment financing
16 projects.
17 (8) To make loans or to guarantee loans to promote
18 agriculture and tourism in this Commonwealth.
19 (b) Actions taken by the oversight committee shall not be
20 subject to review by the financing board.
21 (c) In the exercise of its powers and duties, the oversight
22 committee shall exercise that degree of judgment, skill and care
23 under the circumstances then prevailing that persons of
24 prudence, discretion and intelligence, that are familiar with
25 investment matters, exercise in the management of their own
26 affairs, not in regard to speculation but in regard to permanent
27 disposition of the funds, considering the probable income to be
28 derived from the investments and the probable safety of their
29 capital.
30 (d) The members of the oversight committee and their
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1 professional personnel shall stand in a fiduciary relationship
2 to the Commonwealth and its citizens regarding the investments
3 of the money of the fund and shall not profit, either directly
4 or indirectly, with respect thereto.
5 Section 15.6. Annual Report.--By November 30, 2004, and
6 annually thereafter, the oversight committee shall submit a
7 report to the Governor and to the chair and minority chair of
8 the Appropriations Committee of the Senate and the chair and
9 minority chair of the Appropriations Committee of the House of
10 Representatives. The report shall provide an analysis of the
11 status of the current investments and transactions made by the
12 oversight committee or the department over the previous fiscal
13 year for the program.
14 Section 4. The sum of $12,000,000, or as much thereof as may
15 be necessary, is hereby appropriated to the Pennsylvania
16 Economic Development Financing Authority for the fiscal year
17 July 1, 2003, to June 30, 2004, and is hereby allocated to the
18 oversight committee to carry out the provisions of this act and
19 any other act of the General Assembly which confers financing
20 authority on the oversight committee.
21 Section 5. This act shall take effect July 1, 2003, or
22 immediately, whichever is later.
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