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House Co-Sponsorship Memoranda
House of Representatives
Session of 2023 - 2024
Regular Session
MEMORANDUM
| Posted: | May 5, 2023 08:54 AM |
|---|---|
| From: | Representative John A. Lawrence and Rep. R. Lee James |
| To: | All House members |
| Subject: | COSPONSOR MEMO – Implementing reforms at PENNVEST resulting from the Auditor General’s audit of the $50 million Lyme Timber deal |
| SUMMARY In 2018, PENNVEST authorized a $50 million state-backed loan with a 1% interest rate to Lyme Timber, a New Hampshire-based private equity fund to purchase 60,000 acres of timberland northwest Pennsylvania. The terms of the deal, the size of the loan, and the rock-bottom 1% interest rate generated significant concern both locally and in the halls of the Capitol. A House Agriculture and Rural Affairs committee meeting on this “sweetheart deal” led to more questions than answers, and the House unanimously passed HR948 of 2018 asking the Auditor General to look into the situation. The audit was finally completed last month, with several recommendations to amend the law governing PENNVEST to prevent further such abuses in the future. This bill will take up the recommendations of the Auditor General and institute other common-sense reform measures to prevent further abuse of the PENNVEST program. Your cosponsorship of this proposal is welcome. DETAILS The Pennsylvania Infrastructure Investment Authority, or PENNVEST, is a state agency charged by law “to give low interest loans and some grants to owners and operators of sewer, water, and stormwater systems for infrastructure improvements.” Over the past fifty years, nearly 3,000 municipal water and sewer projects across Pennsylvania have been funded through this program. A big PENNVEST loan might be $5 million. Most are much less than that. Most PENNVEST borrowers are municipalities looking to make improvements to municipal utilities. However, in 2018 PENNVEST authorized record-breaking loans totaling $50 million (with a 1% interest rate) to Lyme Timber, a New Hampshire-based private equity company. Lyme was not looking to fix a municipal sewer system - they used the money to buy 60,000 acres of timberland in northwest Pennsylvania for their investors. After this situation came to light, the House Agriculture and Rural Affairs Committee held an informational meeting to get some answers. The Committee learned that Lyme Timber Company approached the Pennsylvania Department of Conservation and Natural Resources (DCNR) looking for financing to buy the timberland. The ground, owned by Boston-based Hancock Timber Resources, had been for sale for more than two years at a price that some thought was on the high side. DCNR did not have funding options but connected Lyme with PENNVEST, who facilitated what some have called a sweetheart deal - a $50 million state loan at a mere 1 percent interest rate. For its part, Lyme Timber agreed to place 9,362 of the 60,000 acres into a “working forest conservation easement” held by DCNR, to allow some public access to a small part of the property, and to mitigate an existing acid mine drainage issue. A House Agriculture and Rural Affairs committee informational meeting regarding this situation led to more questions than answers, and the House unanimously passed HR948 of 2018 asking the Auditor General to look into the situation. The previous Auditor General failed to take action on HB948. However, Auditor General DeFoor took up this matter late last year, and the audit was finally released last month with a number of recommendations. I would encourage you to review this report, particularly pages 15-16 which detail how PENNVEST administrators did not provide complete information to its board prior to the board approving the Lyme Timber deal. The audit also found that the promised acid mine drainage cleanup is not complete. The audit can be reviewed at the following link: https://www.paauditor.gov/Media/Default/Reports/spePENNVESTAuditReport041323.pdf This entire situation brings troubling questions to light and begs for reform. With this in mind, the proposed bill will take up the recommendations of the Auditor General and institute other common-sense reform measures to prevent further abuse of the PENNVEST program. Your support and cosponsorship are welcome. |