PRINTER'S NO. 606
No. 10 Session of 2003
INTRODUCED BY BRIGHTBILL, JUBELIRER, PICCOLA, WENGER, THOMPSON,
EARLL, ROBBINS, M. WHITE, KUKOVICH, WONDERLING, D. WHITE,
PILEGGI, CONTI, MADIGAN, COSTA, DENT, LEMMOND, RHOADES AND
ARMSTRONG, MARCH 28, 2003
REFERRED TO COMMUNITY AND ECONOMIC DEVELOPMENT, MARCH 28, 2003
AN ACT
1 Providing for an economic enhancement program in the Department
2 of Community and Economic Development; creating tax incentive
3 districts; establishing the Economic Enhancement Fund and the
4 Economic Enhancement Financing Authority; providing for the
5 issuance of bonds and for debt service reserve funds; and
6 making an appropriation.
7 TABLE OF CONTENTS
8 Chapter 1. General Provisions
9 Section 101. Short title.
10 Section 102. Findings.
11 Section 103. Definitions.
12 Chapter 3. Economic Enhancement Program
13 Section 301. Economic Enhancement Program.
14 Section 302. Tax incentive districts.
15 Section 303. Projects.
16 Section 304. Establishment of Economic Enhancement Fund.
17 Chapter 5. Economic Enhancement Financing Authority
18 Section 501. Authority.
19 Section 502. Board.
1 Section 503. Powers and duties.
2 Chapter 7. Bonds of Authority
3 Section 701. Bonds.
4 Section 702. Exemption from taxation.
5 Section 703. Validity of bonds; limitation on actions.
6 Section 704. Provisions of bonds; trust indentures.
7 Section 705. Remedies of obligee of authority.
8 Section 706. Validity of pledge.
9 Section 707. Commonwealth pledges.
10 Section 708. Resolution and law are contracts with holders
11 of bonds.
12 Section 709. Bonds to be legal investments.
13 Section 710. Right to enforcement of pledge of revenues.
14 Section 711. Funds of authority; source of revenue.
15 Section 712. Debt service reserve fund.
16 Section 713. Other funds and accounts.
17 Section 714. Initial issue of authority bonds.
18 Chapter 51. Miscellaneous Provisions
19 Section 5101. Original jurisdiction of Supreme Court.
20 Section 5102. Construction.
21 Section 5103. Appropriation.
22 Section 5104. Severability.
23 Section 5105. Effective date.
24 The General Assembly of the Commonwealth of Pennsylvania
25 hereby enacts as follows:
26 CHAPTER 1
27 GENERAL PROVISIONS
28 Section 101. Short title.
29 This act shall be known and may be cited as the Economic
30 Enhancement Act.
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1 Section 102. Findings.
2 The General Assembly finds and declares as follows:
3 (1) There exist in this Commonwealth areas of economic
4 distress which require coordinated efforts by private and
5 public entities to restore prosperity and to enable these
6 areas to make significant contributions to the economic and
7 social life of this Commonwealth.
8 (2) Long-term economic viability of these areas requires
9 the cooperative involvement of residents, businesses and
10 State and local assistance, and it is in the best interests
11 of this Commonwealth to create incentive zones and to provide
12 grants and loans to persons located in these zones to
13 encourage this long-term economic redevelopment.
14 Section 103. Definitions.
15 The following words and phrases when used in this act shall
16 having the meaning given to them in this section unless the
17 context clearly indicates otherwise:
18 "Authority." The Economic Enhancement Financing Authority
19 established by section 501.
20 "Capital costs." The actual costs of the construction of all
21 of the following:
22 (1) Works or improvements which will become public works
23 or improvements.
24 (2) New buildings, structures or fixtures.
25 (3) The demolition, alteration, remodeling, repair or
26 reconstruction of existing buildings, structures or fixtures.
27 (4) The acquisition, upgrade or rehabilitation of
28 machinery and equipment.
29 (5) The acquisition, clearing or grading of land.
30 The term includes the actual cost of the construction,
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1 rehabilitation or repair of publicly owned infrastructure
2 improvements located outside the boundaries of a tax increment
3 district which are of direct benefit to a project.
4 "Department." The Department of Community and Economic
5 Development of the Commonwealth.
6 "Deteriorated property." A blighted, impoverished area
7 containing residential, industrial, commercial or other real
8 property which is abandoned, unsafe, vacant, undervalued,
9 underutilized, overgrown, defective, condemned or demolished or
10 which contains economically undesirable land use. The term
11 includes all of the following:
12 (1) A tax increment district.
13 (2) Property adjacent to deteriorated property which is
14 significantly undervalued and underutilized due to the
15 proximity of the deteriorated property.
16 "Fund." The Economic Enhancement Fund established by section
17 304.
18 "Issuing authority." As that term is defined in section 3 of
19 the act of July 11, 1990 (P.L.465, No.113), known as the Tax
20 Increment Financing Act.
21 "Project." The undertakings or activities for the
22 elimination of deteriorated property. The term includes property
23 acquisition, clearance, redevelopment, rehabilitation or
24 conservation.
25 "Project costs." An expenditure made or estimated to be made
26 or any monetary obligation incurred or estimated to be incurred
27 in connection with a project. Project costs include all of the
28 following:
29 (1) Capital costs.
30 (2) Financing costs.
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1 (3) Professional service costs.
2 (4) Administrative costs.
3 (5) Relocation costs.
4 (6) Organizational costs.
5 (7) Any other cost associated with a project.
6 "Qualified project." A project approved by the Department of
7 Community and Economic Development under section 303.
8 "Tax incentive district." A contiguous geographic area
9 approved by the Department of Community and Economic Development
10 under section 302.
11 "Tax increment district." As that term is defined in section
12 3 of the act of July 11, 1990 (P.L.465, No.113), known as the
13 Tax Increment Financing Act.
14 CHAPTER 3
15 ECONOMIC ENHANCEMENT PROGRAM
16 Section 301. Economic Enhancement Program.
17 There is hereby established within the department the
18 Economic Enhancement Program. The Economic Enhancement Program
19 shall be comprised of tax incentive districts approved by the
20 department.
21 Section 302. Tax incentive districts.
22 (a) Proposal.--The Governor may, by Executive Order,
23 designate deteriorated property in this Commonwealth as a
24 proposed tax incentive district. An Executive Order designating
25 deteriorated property shall specify the time period for which
26 the property is designated not to exceed 20 years. The
27 department shall immediately notify municipalities located
28 within the area designated.
29 (b) Application.--Within 90 days of receiving notification
30 in accordance with subsection (a), a municipality may apply to
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1 the department for approval of the designation of the
2 deteriorated property as a tax incentive district. The
3 application shall be on a form provided by the department and
4 shall include a copy of the ordinance, resolution or other
5 required action from the governing body of the municipality
6 approving the establishment of the tax incentive district. All
7 appropriate ordinances and resolutions shall be binding and
8 nonrevocable on the municipality.
9 (c) Designation.--If all municipalities within a proposed
10 tax incentive district submit timely completed applications, the
11 department shall approve the applications and designate the
12 property as a tax incentive district. Persons owning property
13 located within a tax incentive district and issuing authorities
14 of tax increment districts located within a tax incentive
15 district shall be eligible to receive grants and loans for
16 qualified projects from the Economic Enhancement Financing
17 Authority.
18 Section 303. Projects.
19 (a) Application.--A person may apply to the department for
20 approval of a project. The application shall be on the form and
21 in the manner established by the department and shall include a
22 detailed list of project costs.
23 (b) Review.--The department shall review the application.
24 The department may approve the project if it determines that all
25 of the following apply:
26 (1) The applicant is a person that owns property in a
27 tax incentive district or is an issuing authority of a tax
28 increment district located within a tax incentive district.
29 (2) The project would be located in a tax incentive
30 district or is located in a tax increment district.
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1 (3) The project would do or does any of the following:
2 (i) Create career-oriented net new jobs or preserve
3 jobs.
4 (ii) Increase and diversify the manufacturing base
5 of this Commonwealth.
6 (iii) Aid in the expansion of existing private
7 companies, particularly those that sell their products
8 outside this Commonwealth.
9 (iv) Attract new industries with new products into
10 economically distressed areas within this Commonwealth.
11 (v) Promote industrial, commercial and other
12 economic development within this Commonwealth.
13 (vi) Promote a healthy environment through the
14 abatement, safe storage, transportation, reduction,
15 elimination, remediation and disposal within this
16 Commonwealth of pollutants and wastes.
17 (vii) Otherwise promote the health, welfare and
18 safety of the residents of this Commonwealth by promoting
19 economic activity and efficiency or alleviating or
20 eliminating unemployment, blight and other unhealthy
21 conditions.
22 (c) Notice.--The department shall notify the authority of
23 projects which have been approved by the department and which
24 are eligible for financial assistance by the authority.
25 Section 304. Establishment of Economic Enhancement Fund.
26 (a) Establishment.--There is hereby established a special
27 fund known as the Economic Enhancement Fund. Interest income
28 derived from investment of the money in the fund shall be
29 credited by the Treasury Department to the fund.
30 (b) Calculation.--Within 30 days of the end of each quarter,
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1 the Department of Revenue shall calculate and notify the
2 Secretary of the Budget of the aggregate revenue received by the
3 Commonwealth pursuant to Articles II, IV and VI of the act of
4 March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of
5 1971, from taxpayers located within tax incentive districts.
6 (c) Transfer.--Within ten days of receiving notification in
7 accordance with subsection (b), the Secretary of the Budget
8 shall direct the State Treasurer to transfer the sum equal to
9 25% of the aggregate revenue received by the Commonwealth
10 pursuant to Articles II, IV and VI of the Tax Reform Code of
11 1971, from taxpayers located within tax incentive districts,
12 from the General Fund to the fund.
13 (d) Appropriation and payments.--Moneys in the fund are
14 hereby appropriated on a continuing basis to the authority. The
15 State Treasurer shall provide semiannual payments to the
16 authority on August 1 and February 1 of each year until the
17 authority is terminated in accordance with section 501. August 1
18 payments shall be equal to the balance of the fund on July 15 of
19 that calendar year, and February 1 payments shall be equal to
20 the balance of the fund on January 15 of that calendar year.
21 CHAPTER 5
22 ECONOMIC ENHANCEMENT FINANCING AUTHORITY
23 Section 501. Authority.
24 (a) Establishment.--There is hereby established an authority
25 to be known as the Economic Enhancement Financing Authority. The
26 authority shall be a body corporate and politic and shall assist
27 persons in funding economic development in tax incentive
28 districts.
29 (b) Governance.--The powers and duties of the authority
30 shall be exercised by a board.
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1 (c) Revenues.--Expenses of the authority shall be paid from
2 revenues derived from investment income of the authority and
3 from money appropriated to the authority in accordance with
4 section 304. The funds appropriated to the authority in section
5 5104 shall be repaid by the authority from the proceeds of the
6 initial issue of bonds by the authority. The Commonwealth shall
7 not be responsible for funding the annual budget of the
8 authority.
9 (d) Fiscal year.--The fiscal year of the authority shall be
10 the same as the fiscal year of the Commonwealth.
11 (e) Audit.--The authority shall conduct an independent audit
12 of its accounts and records annually.
13 (f) General Assembly review.--
14 (1) The chairperson and minority chairperson of the
15 Appropriations Committee of the Senate and the chairperson
16 and minority chairperson of the Appropriations Committee of
17 the House of Representatives shall have the right at any time
18 to examine the books, accounts and records of the authority.
19 (2) The authority shall file an annual report with the
20 chairperson and the minority chairperson of the
21 Appropriations Committee of the Senate and the chairperson
22 and the minority chairperson of the Appropriations Committee
23 of the House of Representatives. The report shall include all
24 of the following:
25 (i) A copy of the authority's budget.
26 (ii) The total amount of debt service to become due
27 on authority bonds for the ensuing fiscal year, including
28 payments of interest and principal, maturity value or
29 sinking fund payments.
30 (iii) The amount, if any, due to any provider of any
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1 credit or liquidity facility representing payments made
2 by the provider as provided in the applicable resolution
3 or trust indenture as a result of any previous failure of
4 the authority to make any payment provided for in the
5 applicable resolution or trust indenture, including any
6 related reasonable interest, fees or charges.
7 (iv) The amount, if any, required to restore the
8 debt service reserve fund to the level required under
9 section 713 and the resolution of the authority
10 establishing the fund.
11 (v) The amount, if any, required to be rebated to
12 the United States to provide for continued Federal tax
13 exemption for bonds of the authority.
14 (f) Publication.--The authority shall annually publish a
15 concise financial statement in the Pennsylvania Bulletin.
16 (g) Limitation on bankruptcy filing.--Notwithstanding any
17 other provision of law, the authority shall not be authorized to
18 file a petition for relief under 11 U.S.C. Ch. 9 (relating to
19 bankruptcy) or any successor Federal bankruptcy law if the
20 authority has outstanding bonds issued pursuant to this act.
21 (h) Termination.--The authority shall terminate one year
22 after all of its liabilities have been fully paid and
23 discharged. Upon the termination, all of its rights and
24 properties, including funds remaining in the debt service
25 reserve fund, shall be paid to the Commonwealth.
26 Section 502. Board.
27 (a) Composition.--The board of the authority shall be
28 composed of the following five members:
29 (1) The Secretary of the Budget.
30 (2) The Secretary of the Department of Revenue.
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1 (3) The Secretary of the Department of Community and
2 Economic Development.
3 (4) Two members of the public with experience in finance
4 or management appointed by the Governor.
5 (b) Term.--The members of the board appointed by the
6 Governor shall serve for a term of three years.
7 (c) Organization.--The members of the board shall elect from
8 among themselves a chairperson, vice chairperson, secretary,
9 treasurer and such other officers as they may determine. A
10 member may hold more than one office of the board at any time.
11 (d) Meetings.--The board shall meet at the call of the
12 chairperson but at least once during each quarter of the fiscal
13 year.
14 (e) Expenses.--A member shall not receive compensation or
15 remuneration, but shall be entitled to reimbursement for all
16 reasonable and necessary actual expenses.
17 (f) Public officials and party officers.--The members of the
18 board appointed by the Governor shall not seek or hold a
19 position as any other public official within this Commonwealth
20 or as a party officer while being a member of the board of the
21 authority.
22 (g) Liability.--Members of the board shall not be liable
23 personally on any obligations of the authority, including,
24 without limitation, bonds of the authority and shall be immune
25 from suit.
26 (h) Applicability.--The provisions of the following acts
27 shall apply to the authority:
28 (1) The act of June 21, 1957 (P.L.390, No.212), referred
29 to as the Right-to-Know Law.
30 (2) The act of July 19, 1957 (P.L.1017, No.451), known
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1 as the State Adverse Interest Act.
2 (3) The provisions of 65 Pa.C.S. Chs. 7 (relating to
3 open meetings) and 11 (relating to ethic standards and
4 financial disclosure).
5 Section 503. Powers and duties.
6 (a) Powers.--The authority, through action of the board,
7 shall have all of the following powers:
8 (1) The power to adopt bylaws, guidelines and
9 regulations as it deems necessary.
10 (2) The power to contract and to execute instruments,
11 including guarantees, sureties, mortgages and contracts of
12 insurance, necessary or convenient for the carrying on of its
13 business.
14 (3) The power to sue and be sued, implead and be
15 impleaded, complain and defend in court.
16 (4) The power to borrow money, incur debt and, in
17 anticipation of the receipt of income of the authority, make,
18 issue and secure bonds or notes.
19 (5) The power to acquire, accept, purchase, receive,
20 hold and invest funds and property, tangible or intangible,
21 from all available sources, directly or by assignment, pledge
22 or otherwise.
23 (6) The power to sell, transfer, convey and dispose of
24 any property, tangible or intangible.
25 (7) The power to adopt, use and alter at will a
26 corporate seal.
27 (8) The power to employ such persons as are necessary or
28 convenient for the carrying on of its business.
29 (9) The power to retain counsel and auditors to render
30 such professional services as the authority deems
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1 appropriate.
2 (10) The power to pledge the credit of the authority and
3 to provide such security and liquidity as may be required by
4 creditors.
5 (11) The power to cooperate with any Federal agency or
6 government agency.
7 (12) Any other power necessary or convenient for the
8 promotion or general welfare of the authority.
9 (b) Duties.--The authority shall provide financial
10 assistance to persons for qualified projects. The financial
11 assistance shall be in the form of loans or multiyear grants and
12 may include proceeds from the sale of bonds. If the financial
13 assistance provided to a person is from the proceeds of a bond
14 issuance, the board shall require the person to be a surety of
15 the bonds. The board may impose such other terms and conditions
16 on the financial assistance authorized by this subsection as the
17 board determines is in the best interests of the authority.
18 (c) Limitations.--
19 (1) In accordance with section 8 of Article VIII of the
20 Constitution of Pennsylvania, the board and the authority
21 shall have no power to pledge the credit or taxing powers of
22 the Commonwealth, nor shall any of the bonds of the authority
23 be deemed a debt or liability of the Commonwealth.
24 (2) The authority shall be solely liable for the payment
25 of the principal, interest or premium on any bonds issued by
26 the authority. The Commonwealth shall have no legal or moral
27 obligation for the payment of any expenses or obligations of
28 the authority, including bond principal and interest, the
29 funding or refunding of any reserves and any administrative
30 or operating expenses whatsoever, other than for the advance
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1 of funds for initial operating expenses of the authority
2 contained in section 701 to be repaid by the authority as
3 provided in this act. Bonds issued by the authority shall
4 contain a prominent statement of the limitation set forth in
5 this subsection and shall further recite that obligees of the
6 authority shall have no recourse, either legal or moral, to
7 the Commonwealth for payment of the bonds of the authority.
8 CHAPTER 7
9 BONDS OF AUTHORITY
10 Section 701. Bonds.
11 (a) Authorization.--Bonds of the authority shall be
12 authorized by a resolution of the board and shall be of a
13 series, bear such date or dates and bear or accrue interest at
14 the rate or rates determined by the board to be necessary to
15 issue and sell the authorized bonds. The bonds shall be in the
16 denominations; be in the form, either coupon or fully registered
17 without coupons or in certificated or book-entry-only form;
18 carry such registration, exchangeability and interchangeability
19 privileges; be payable in the medium of payment and at such
20 place or places; be subject to the terms of redemption and be
21 entitled to the priorities of payment in the revenues or
22 receipts of the authority as the resolution of the board
23 provides. Bonds shall be signed by or shall bear the facsimile
24 signature of the officer designated by the board. Interest
25 coupons shall be attached to coupon bonds and shall bear the
26 facsimile signature of the treasurer of the authority. Bonds
27 shall be authenticated by an authenticating agent, fiscal agent
28 or trustee. Bonds may be issued and delivered notwithstanding
29 that the officer signing the bonds or the treasurer whose
30 facsimile signature is on a coupon shall have ceased to be the
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1 officer at the time when the bond is actually delivered.
2 (b) Maturity date.--
3 (1) Bonds issued to provide financial assistance to
4 persons shall mature at such time or times not exceeding ten
5 years from their respective dates of original issue.
6 (2) Bonds issued to finance the costs of a capital
7 project shall mature at such time or times not exceeding the
8 weighted average useful life of the projects being financed
9 and in no event exceeding 30 years from their respective
10 dates of original issue.
11 (3) Bonds issued in anticipation of income of the
12 authority shall mature within the fiscal year of the date of
13 issuance thereof, except for bonds issued in anticipation of
14 grants from the Commonwealth, a government agency or Federal
15 agency, which bonds shall mature no later than the time of
16 anticipated receipt of such grant.
17 (c) Sale.--Bonds may be sold at public sale or invited sale
18 for the price or prices and at the rate or rates of interest as
19 the authority determines. Bonds may be sold at private sale by
20 negotiation at the price or prices and at the rate or rates of
21 interest as the authority determines, but only if the authority
22 makes a written public explanation of the circumstances and
23 justification for the private sale by negotiation. Pending the
24 preparation of the definitive bonds, interim receipts may be
25 issued to the purchaser or purchasers of the bonds and shall
26 contain the terms and conditions established by the authority.
27 (d) Negotiable instruments.--Bonds of the authority shall
28 have the qualities of negotiable instruments under 13 Pa.C.S.
29 (relating to Commercial Code).
30 (e) Use of proceeds.--The proceeds of an issue of bonds may
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1 be used to pay the costs of issuance of the bonds, to pay costs
2 of administration of authority, to fund reserves for the bonds,
3 to capitalize interest on the bonds for a period not to exceed
4 12 months, to pay the costs of capital projects in areas
5 designated by the Governor under Chapter 3, to reimburse the
6 Commonwealth for the appropriation made in section 5104 and to
7 fund up to $500,000 of initial operating expenses of the
8 authority.
9 (f) Refunding.--Subject to the provisions of this act and
10 bonds, notes or other obligations issued in accordance with this
11 act, the authority may refund any outstanding debt of the
12 authority, whether the debt represents principal or interest, in
13 whole or in part, at any time. The term of any bonds issued for
14 refunding purposes shall not extend to a maturity date which
15 could not have been included in the original issue of bonds
16 being refunded. For the purposes of this subsection, the term
17 "refund" and its variations shall mean the issuance and sale of
18 obligations the proceeds of which are used or are to be used for
19 the payment or redemption of outstanding obligations upon or
20 prior to maturity.
21 Section 702. Exemption from taxation.
22 The effectuation of the authorized purposes of the authority
23 shall and will be in all respects for the benefit of the people
24 of this Commonwealth, for the increase of their commerce and
25 prosperity and for the improvements of their health, safety,
26 welfare and living conditions; and, since the authority will be
27 performing such essential governmental functions in effectuating
28 such purposes, the authority shall not be required to pay any
29 taxes or assessments upon any property acquired or used or
30 permitted to be used by the authority for its purposes; and the
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1 bonds issued by the authority, their transfer and the income
2 therefrom, including any profits made on the sale thereon,
3 shall, at all times, be free from State and local taxation
4 within this Commonwealth. This exemption shall not extend to
5 gift, estate, succession or inheritance taxes or any other taxes
6 not levied directly on the bonds, the transfer thereof, the
7 income therefrom or the realization of profits on the sale
8 thereof.
9 Section 703. Validity of bonds; limitation on actions.
10 (a) Presumption.--A bond reciting in substance that it has
11 been issued by the authority to accomplish the public purposes
12 of this act shall be conclusively deemed in any suit, action or
13 proceeding involving the validity or enforceability of the bonds
14 or security therefor to have been issued for the purposes.
15 (b) Filing.--The authority shall file a copy of a resolution
16 authorizing the issuance of bonds in its office for public
17 inspection and shall publish in three newspapers of general
18 circulation in this Commonwealth a notice stating:
19 (1) The fact and date of such adoption.
20 (2) The places where such resolution has been so filed
21 for public inspection.
22 (3) The date of publication of such notice.
23 (4) That any action or proceeding of any kind or nature
24 in any court questioning the validity or proper authorization
25 of bonds provided for by the resolution, or the validity of
26 any covenants, agreements or contract provided for by such
27 resolution, shall be commenced within ten days after the
28 publication of such notice.
29 After publication of the notice, if no action or proceeding
30 questioning the validity or proper authorization of bonds
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1 provided for by the resolution referred to in the notice, or the
2 validity of any covenants, agreements or contracts provided by
3 the resolution shall be commenced within ten days after the
4 publication of the notice, then all residents of this
5 Commonwealth and all other persons whatsoever shall be forever
6 barred and foreclosed from instituting or commencing any action
7 or proceeding in any court, or pleading any defense to any
8 action or proceedings, questioning the validity or proper
9 authorization of the bonds or the validity of the covenants,
10 agreements or contracts, and the bonds, covenants, agreements
11 and contracts shall be conclusively deemed to be valid and
12 binding obligations in accordance with their terms and tenor.
13 (c) Estoppel.--After issuance of bonds, bonds shall be
14 conclusively presumed to be fully authorized and issued by all
15 the laws of this Commonwealth, and any person shall be estopped
16 from questioning their sale, execution or delivery by the
17 authority.
18 Section 704. Provisions of bonds; trust indentures.
19 In connection with the issuance of bonds and in order to
20 secure the payment of its bonds, the authority, in addition to
21 its other powers, shall have the power to do all of the
22 following:
23 (1) Pledge or grant a security interest in all or any
24 part of its gross or net revenues to which its right then
25 exists or which may thereafter come into existence.
26 (2) Grant a security interest in all or any part of its
27 personal property then owned or thereafter acquired.
28 (3) Covenant against pledging or granting a security
29 interest in all or any part of its revenues or all or any
30 part of its personal property to which its right or title
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1 exists or may thereafter come into existence, or against
2 permitting or suffering any lien on its revenues or property;
3 covenant with respect to limitations on its right to sell,
4 lease or otherwise dispose of any of its real property; and
5 covenant as to which other or additional debts or obligations
6 may be incurred by it.
7 (4) Covenant as to the bonds to be issued and as to the
8 issuance of the bonds, in escrow or otherwise, and as to the
9 use and disposition of the proceeds thereof; provide for the
10 replacement of lost, destroyed or mutilated bonds; covenant
11 against extending the time for the payment of bonds or
12 interest thereon; redeem the bonds, and covenant for their
13 redemption and provide the terms and conditions thereof.
14 (5) Covenant as to the amount of revenues to be received
15 in each fiscal year or other period of time by the authority,
16 as well as to the use and disposition to be made thereof,
17 create or authorize the creation of special funds or reserves
18 for debt service or other purposes and covenant as to the use
19 and disposition of the moneys held in such funds.
20 (6) Prescribe the procedure, if any, by which the terms
21 of any contract with bondholders may be amended or abrogated,
22 and the amount of bonds the holders of which must consent
23 thereto, and the manner in which the consent may be given.
24 (7) Covenant as to the use of any or all of its real or
25 personal property, to warrant its title, and covenant as to
26 the maintenance of its real and personal property, the
27 replacement thereof, the insurance to be carried thereon and
28 the use and disposition of insurance proceeds.
29 (8) Covenant as to the rights, liabilities, powers and
30 duties arising upon the breach by it of any covenant,
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1 condition or obligation, provided that the authority shall
2 not be permitted to covenant that, upon a breach, any or all
3 of its bonds shall become or may be declared due before
4 stated maturity.
5 (9) Vest in a trustee or the holders of bonds, or any
6 proportion of them, the right to enforce the payment of the
7 bonds or any covenants securing or relating to the bonds;
8 vest in a trustee the right, in the event of default in
9 payments of interest or on principal of bonds by the
10 authority, to take possession and use, operate and manage any
11 real or personal property and to collect the revenues and
12 receipts of an authority and to dispose of such moneys in
13 accordance with the agreement of the authority with the
14 trustee; provide for the powers and duties of a trustee and
15 to limit liabilities thereof; and provide the terms and
16 conditions upon which a trustee or the holders of bonds, or
17 any proportion of them, may enforce any covenant or rights
18 securing or relating to the bonds.
19 (10) Enter into interest rate exchange agreements,
20 interest rate cap and floor agreements and other similar
21 agreements which in the judgment of the authority will assist
22 the authority in managing the interest costs of the
23 authority.
24 (11) Obtain letters of credit, bonds insurance and other
25 facilities for credit enhancement and liquidity.
26 (12) Exercise all or any part or combination of the
27 powers granted in this act, make covenants other than and in
28 addition to the covenants expressly authorized by this act,
29 make such covenants and do any and all such acts and things
30 as may be necessary or convenient or desirable in order to
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1 secure its bonds or, in the absolute discretion of the
2 authority, as will tend to accomplish the purposes of this
3 act by making the bonds more marketable, notwithstanding that
4 such covenants, acts or things may not be specifically
5 enumerated by this act.
6 Notwithstanding any provision of this act to the contrary, the
7 real property of the authority shall not be mortgaged and shall
8 not be subject to attachment nor levied upon by execution or
9 otherwise. The revenues of the authority and the personal
10 property of the authority shall be pledged or otherwise
11 encumbered only as expressly provided in this section and,
12 except to the extent necessary to effectuate the pledge or
13 encumbrance, shall not be subject to attachment nor levied upon
14 by execution or otherwise.
15 Section 705. Remedies of obligee of authority.
16 In addition to all other rights which may be conferred on the
17 obligee subject only to any contractual restrictions binding
18 upon the obligee, an obligee of the authority shall have all of
19 the following rights:
20 (1) To compel, by mandamus, suit, action or proceeding
21 at law or in equity, the authority and the members of its
22 governing board, officers, agents or employees thereof to
23 perform each and every term, provision and covenant contained
24 in any bond or contract of the authority with or for the
25 benefit of such obligee and to require the carrying out of
26 any or all such covenants and agreements of the authority and
27 the fulfillment of all duties imposed upon the authority by
28 this act.
29 (2) To obtain, by proceeding in equity, an injunction
30 against any acts or things which may be unlawful or the
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1 violation of any of the rights of such obligee of the
2 authority.
3 (3) To require the authority to account as if it were
4 the trustee of an express trust for the obligees of the
5 authority for any pledged revenues received.
6 Section 706. Validity of pledge.
7 Any pledge of or grant of a security interest in revenues of
8 the authority or personal property of an authority made by the
9 authority shall be valid and binding from the time when the
10 pledge is made. The revenues or other property pledged and
11 thereafter received by the authority shall immediately be
12 subject to the lien of the pledge or security interest without
13 any physical delivery thereof or further act. The lien of the
14 pledge or security interest shall be valid and binding as
15 against all parties having claims of any kind in tort, contract
16 or otherwise against the authority irrespective of whether such
17 parties have notice thereof. Neither the resolution nor any
18 other instrument of the authority by which a pledge or security
19 interest is created need be recorded or filed to perfect the
20 pledge or security interest.
21 Section 707. Commonwealth pledges.
22 (a) Bondholders.--The Commonwealth does hereby pledge to and
23 agree with each and every obligee of the authority that the
24 Commonwealth will not limit or alter the rights hereby vested in
25 the authority in any manner inconsistent with the obligations of
26 the authority to its obligees until all bonds at any time
27 issued, together with the interest thereon, are fully paid and
28 discharged.
29 (b) Lessees.--The Commonwealth does hereby pledge to and
30 agree with any person who, as owner thereof, leases or subleases
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1 property to or from the authority that the Commonwealth will not
2 limit or alter the rights and powers hereby vested in the
3 authority or otherwise created by this act in any manner which
4 impairs the obligations of the authority until all such
5 obligations of the authority under the lease or sublease are
6 fully met and discharged.
7 Section 708. Resolution and law are contracts with holders of
8 bonds.
9 Except as otherwise provided in any resolution of the
10 authority authorizing or awarding bonds, the terms of a
11 resolution and any agreement authorized by the resolution and
12 the terms of this act as in effect when the bonds were
13 authorized shall constitute a contract between the authority and
14 the obligees, subject to modification by the vote by holders of
15 the percentage of bonds as the resolution authorizing or
16 awarding the bonds provides.
17 Section 709. Bonds to be legal investments.
18 Bonds issued pursuant to this act are hereby made securities
19 in which all government agencies, all insurance companies, trust
20 companies, banking associations, banking corporations, savings
21 banks, investment companies, executors, the trustees of any
22 retirement, pension or annuity fund or system of the
23 Commonwealth, trustees and other fiduciaries may properly and
24 legally invest funds, including capital, deposits or other funds
25 in their control or belonging to them. The bonds are hereby made
26 securities which may properly and legally be deposited with and
27 received by any government agency for any purpose for which the
28 deposit of bonds or other obligations of the Commonwealth now or
29 may hereafter be authorized by law.
30 Section 710. Right to enforcement of pledge of revenues.
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1 The obligees of the authority shall have the right to enforce
2 a pledge of or security interest in revenues of the authority
3 securing payment of bonds of the authority against all
4 government agencies in possession of any such revenues at any
5 time, which revenues may be collected directly from such
6 officials upon notice by the obligees or a trustee for the
7 obligees for application to the payment of the bonds as and when
8 due or for deposits in any sinking, bond or debt service fund
9 established by this act or established by resolution of the
10 authority with the trustee at the times and in the amounts
11 specified in the bonds or the resolution or indenture or trust
12 agreement securing the bonds. Any government agency in
13 possession of any such revenues shall make payment against
14 receipt and shall thereby be discharged from any further
15 liability or responsibility for such revenues. If payment is
16 made to a holder of bonds, it shall be made against surrender of
17 the bonds to the payor for delivery to the authority in the case
18 of payment in full; otherwise, it shall be made against
19 production of the bonds for notation thereon of the amount of
20 the payment. The provisions of this section with respect to the
21 enforceability and collection of revenues which secure bonds
22 shall supersede any contrary or inconsistent statutory provision
23 or rule of law. This section shall be construed and applied to
24 fulfill the legislative purpose of clarifying and facilitating
25 the financing of the authority by assuring to the obligees of
26 the authority the full and immediate benefit of the security for
27 the bonds without delay, diminution or interference based on any
28 statute, decision, ordinance or administrative rule or practice.
29 Section 711. Funds of authority; source of revenue.
30 (a) Receipt by treasurer.--All funds of the authority
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1 received from any source shall be delivered to or upon the order
2 of the treasurer of the authority or to such other agent of the
3 authority as the board may designate. Funds received by the
4 authority shall be promptly deposited in a bank or banks in this
5 Commonwealth chosen by the board. The moneys in the accounts of
6 the authority may be paid by the treasurer of the authority or
7 other designated agent of the authority on warrant of the
8 treasurer of the authority. All deposits of moneys may, if
9 required by the authority, be secured by obligations of the
10 United States or of the Commonwealth of a market value equal at
11 all times to the amount of the deposit, and all banks and trust
12 companies are authorized to give security for such deposits,
13 provided that no moneys deposited in a debt service reserve fund
14 may be secured by a deposit of obligations issued by or
15 obligations guaranteed by an assisted city.
16 (b) Investment of funds.--Subject to the provisions of any
17 agreements with obligees of the authority, all funds of the
18 authority, including the proceeds of bonds, which are not
19 required for immediate use may be invested in obligations of the
20 Federal Government or of the Commonwealth or obligations which
21 are legal investments for Commonwealth funds.
22 Section 712. Debt service reserve fund.
23 (a) Authorization.--The authority may establish one or more
24 debt service reserve funds into which it shall deposit:
25 (1) Proceeds from the sale of bonds, to the extent
26 provided in the resolution or resolutions authorizing the
27 bonds.
28 (2) Any other moneys made available to the authority
29 from any source.
30 All moneys held in any debt service reserve fund, except as
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1 provided hereafter, shall be used when required solely for the
2 payment of the principal of bonds secured in whole or in part by
3 the fund or of the sinking fund payments, if any, with respect
4 to the bonds, the purchase or redemption of the bonds, the
5 payment of interest on the bonds or the payment of any
6 redemption premium required to be paid when the bonds and notes
7 are redeemed prior to maturity. Any debt service reserve fund
8 established pursuant to this section shall be a trust fund held
9 for the benefit and security of the obligees of the authority
10 whose bonds are secured by the fund. Moneys in a debt service
11 reserve fund shall not be withdrawn from the fund at any time in
12 an amount that would reduce the amount of the fund to less than
13 the minimum reserve fund requirement established for the fund in
14 the resolution of the authority creating the fund, except for
15 withdrawals for the purpose of making payments when due of
16 principal, interest, redemption premiums and sinking fund
17 payments, if any, with respect to the bonds for the payment of
18 which other moneys of the authority are not available. Any
19 income or interest earned by or increments to any debt service
20 reserve fund due to the investment thereof may be transferred by
21 the authority to other funds or accounts of the authority to the
22 extent the transfer does not reduce the amount of the debt
23 service reserve fund below the minimum reserve fund requirement
24 established for that fund. Funds transferred to other accounts
25 in accordance with the preceding requirements may be used for
26 whatever purposes the authority deems appropriate so long as the
27 purposes are consistent with this act and the contracts of the
28 authority with obligees of the authority and with assisted
29 cities.
30 (b) Bond limitation.--The authority shall not at any time
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1 issue bonds secured in whole or in part by a debt service
2 reserve fund if issuance of the bonds would cause the amount in
3 the debt reserve fund to fall below the minimum reserve
4 requirement for the fund, unless the authority at the time of
5 issuance of the bonds deposits in the fund an amount, from the
6 proceeds of the bonds to be issued or from other sources, which
7 when added to the amount already in the fund will cause the
8 total amount on deposit in the fund to equal or exceed the
9 minimum reserve fund requirement.
10 (c) Definition.--For the purposes of this section, the term
11 "minimum reserve fund requirement" shall mean that amount
12 defined as the minimum reserve fund requirement in the
13 resolution or resolutions of the authority authorizing the
14 bonds.
15 Section 713. Other funds and accounts.
16 (a) Authorization.--The authority shall create funds and
17 accounts as may be necessary or desirable for its corporate
18 purposes and shall pay into each fund or account any moneys of
19 the authority available for such purposes or any moneys made
20 available by any other person for the purposes of the fund or
21 account. No other provision of this act shall be construed to
22 prohibit the authority from creating within any fund one or more
23 accounts which may be used or pledged by the authority for a
24 special purpose.
25 (b) Use of fund money.--Any moneys deposited in any fund
26 created by the authority to be used to pay debt service,
27 including, without limitation, the bond payment account, any
28 sinking fund or debt service reserve fund and all investments
29 and proceeds of investments thereof shall, without further
30 action or filing, be subjected to a perfected security interest
20030S0010B0606 - 27 -
1 for the obligees of the authority for whom the fund is held
2 until the moneys or investments shall be properly disbursed in
3 accordance with this act and with the terms of the contract of
4 the authority with its obligees.
5 Section 714. Initial issue of authority bonds.
6 The first series of bonds to be issued by the authority shall
7 be issued in a manner and at a time so that the net proceeds of
8 the bonds shall be available on or before June 30, 2003, or as
9 soon as practicable thereafter.
10 CHAPTER 51
11 MISCELLANEOUS PROVISIONS
12 Section 5101. Original jurisdiction of Supreme Court.
13 The Pennsylvania Supreme Court shall have exclusive
14 jurisdiction to hear any challenge to or to render a declaratory
15 judgment concerning the constitutionality of this act, the
16 contractual rights of the parties relating to bonds issued under
17 this act or any action of the authority in issuing or attempting
18 to issue bonds.
19 Section 5102. Construction.
20 The provisions of this act providing for security for and
21 rights and remedies of obligees of the authority shall be
22 liberally construed to achieve the purposes stated and provided
23 for in this act.
24 Section 5103. Appropriation.
25 The sum of $500,000 is hereby appropriated to the Economic
26 Enhancement Financing Authority from the General Fund. The
27 appropriation in this section is an advance which shall be
28 repaid by the authority from sources described in section 501(c)
29 as soon as is practicable and in no event later than June 30,
30 2004.
20030S0010B0606 - 28 -
1 Section 5104. Severability.
2 The provisions of this act are severable. If any provision of
3 this act is judged to be invalid by a court of competent
4 jurisdiction, the order or judgment shall be confined in its
5 operation to the controversy in which it was rendered and shall
6 not affect or invalidate the remainder of any provisions.
7 Section 5105. Effective date.
8 This act shall take effect July 1, 2003.
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