PRINTER'S NO. 1930
No. 1607 Session of 1979
INTRODUCED BY KNEPPER, COCHRAN, MILLER, SCIRICA, RHODES,
TADDONIO, LEHR, HOEFFEL, ITKIN, DAWIDA, AUSTIN, COWELL,
IRVIS, BERSON, O'DONNELL, WHITE, BORSKI, MURPHY AND
MICHLOVIC, JULY 3, 1979
REFERRED TO COMMITTEE ON STATE GOVERNMENT, JULY 3, 1979
AN ACT
1 Amending the act of May 24, 1945 (P.L.991, No.385), entitled "An
2 act to promote elimination of blighted areas and supply
3 sanitary housing in areas throughout the Commonwealth; by
4 declaring acquisition, sound replanning and redevelopment of
5 such areas to be for the promotion of health, safety,
6 convenience and welfare; creating public bodies corporate and
7 politic to be known as Redevelopment Authorities; authorizing
8 them to engage in the elimination of blighted areas and to
9 plan and contract with private, corporate or governmental
10 redevelopers for their redevelopment; providing for the
11 organization of such authorities; defining and providing for
12 the exercise of their powers and duties, including the
13 acquisition of property by purchase, gift or eminent domain;
14 the leasing and selling of property, including borrowing
15 money, issuing bonds and other obligations, and giving
16 security therefor; restricting the interest of members and
17 employes of authorities; providing for notice and hearing;
18 supplying certain mandatory provisions to be inserted in
19 contracts with redevelopers; prescribing the remedies of
20 obligees of redevelopment authorities; conferring certain
21 duties upon local planning commissions, the governing bodies
22 of cities and counties, and on certain State officers, boards
23 and departments," further clarifying provisions regarding the
24 powers and duties of the Authority and its powers with
25 respect to the issuance of bonds.
26 The General Assembly of the Commonwealth of Pennsylvania
27 hereby enacts as follows:
28 Section 1. The first paragraph of section 2, act of May 24,
1 1945 (P.L.991, No.385), known as the "Urban Redevelopment Law,"
2 is amended by adding clauses to read:
3 Section 2. Findings and Declaration of Policy.--It is hereby
4 determined and declared as a matter of legislative finding--
5 * * *
6 (h) The welfare of the Commonwealth is threatened by the
7 fact that throughout Pennsylvania the supply of residential
8 housing facilities for persons and families of low and moderate
9 income is inadequate to meet the need for such housing created
10 by an expanding population, the wearing out of older dwellings
11 and the elimination of substandard dwellings by governmental
12 action.
13 (i) Many of the existing residential housing facilities in
14 the Commonwealth are in need of rehabilitation, improvement or
15 replacement.
16 (j) There has been an exodus of families from blighted and
17 deteriorated areas, thereby eroding the tax base of cities and
18 counties.
19 (k) Because of higher construction costs, a scarcity of
20 financing available for housing and the resulting increase in
21 interest rates, the housing need which exists in fact has not
22 been able to find economic expression in a market demand
23 sufficient to encourage greater production and supply of
24 residential housing facilities by private industry or to attract
25 a sufficient supply of funds to finance the acquisition,
26 construction, rehabilitation, improvement or equipping of
27 residential housing facilities to meet the needs of persons and
28 families of low and moderate income.
29 Section 2. The last paragraph of section 2 of the act,
30 amended May 27, 1957 (P.L.197, No.98), is amended to read:
19790H1607B1930 - 2 -
1 Section 2. Findings and Declaration of Policy.--It is hereby
2 determined and declared as a matter of legislative finding--
3 * * *
4 Therefore, it is hereby declared to be the policy of the
5 Commonwealth of Pennsylvania to promote the health, safety and
6 welfare of the inhabitants thereof by the creation of bodies
7 corporate and politic to be known as Redevelopment Authorities,
8 which shall exist and operate for the public purposes of:
9 (1) the elimination of blighted areas through economically
10 and socially sound redevelopment of such areas, as provided by
11 this act, in conformity with the comprehensive general plans of
12 their respective municipalities for residential, recreational,
13 commercial, industrial or other purposes[, and];
14 (2) maintaining persons of low and moderate income in the
15 cities and counties and attracting and retaining persons of
16 upper income into the cities and deteriorated portions of the
17 counties through the participation in residential housing
18 programs; and
19 (3) otherwise encouraging the provision of healthful homes, a
20 decent living environment and adequate places for employment of
21 the people of this Commonwealth. Such purposes are hereby
22 declared to be public uses for which public money may be spent,
23 and private property may be acquired by the exercise of the
24 power of eminent domain.
25 Section 3. Section 3 of the act is amended by adding clauses
26 to read:
27 Section 3. Definitions.--The following terms where used in
28 this act, shall have the following meanings, except where the
29 context clearly indicates a different meaning:
30 * * *
19790H1607B1930 - 3 -
1 (d.1) Family."--Two or more persons related by blood or
2 marriage living in the same residence.
3 * * *
4 (e.1) "Financial institution."--A National or State bank,
5 bank and trust company, savings bank, Federal or State savings
6 and loan association, savings association or building and loan
7 association.
8 * * *
9 (g.1) "Low and moderate income."--Persons whose income does
10 not exceed an amount determined by multiplying two by the median
11 family income (as determined from time to time by the United
12 States Department of Housing and Urban Development) for the
13 county in which the residential housing program is being
14 conducted, or, in cases where the aforesaid department has not
15 published a median family income for the county, by multiplying
16 two by the median family income for the Standard Metropolitan
17 Statistical Area encompassing the county in which the
18 residential housing program is being conducted. For purposes of
19 calculating income, the income received by all members of a
20 family who are eighteen years of age and older (excluding full-
21 time students) shall be included. The determination by an
22 Authority of persons of low and moderate income shall be final.
23 * * *
24 (s) "Residential Housing Program."--The purchase by an
25 Authority, from the proceeds of a designated issue of bonds and
26 from any other funds available to the Authority and designated
27 for that purpose, of loans made for the purpose of financing or
28 refinancing the construction, rehabilitation, improvement,
29 equipping or acquisition of residential housing located within
30 the field of operation of the Authority by or for persons of low
19790H1607B1930 - 4 -
1 income and persons of moderate income and in blighted areas by
2 or for persons of any income.
3 Section 4. Section 9 of the act is amended by adding a
4 clause to read:
5 Section 9. Powers of an Authority.--An Authority shall
6 constitute a public body, corporate and politic, exercising
7 public powers of the Commonwealth as an agency thereof, which
8 powers shall include all powers necessary or appropriate to
9 carry out and effectuate the purposes and provisions of this
10 act, including the following powers in addition to those herein
11 otherwise granted:
12 * * *
13 (o.1) With the approval of the city or the county given
14 pursuant to section 13.1 hereof, to borrow money and issue bonds
15 (as hereinbefore defined) for the purpose of providing funds for
16 residential housing programs and, in connection therewith, (1)
17 to purchase and hold notes or other obligations secured by
18 mortgages, deeds of trust or other security interests in
19 residential housing, (2) to sell, assign, pledge, encumber or
20 hypothecate any notes, obligations, mortgages, or other
21 agreements acquired in connection with a residential housing
22 project, (3) to grant to any trustee, in addition to any other
23 rights or remedies provided for in this act, any rights or
24 remedies contained in such notes, obligations, mortgages or
25 other agreements, (4) to purchase, or provide for the purchase
26 of, insurance at rates approved by the Authority on any security
27 acquired, held by or granted to the Authority in connection with
28 a residential housing project, and (5) to establish, revise,
29 charge and collect such fees and charges, including but not
30 limited to service charges, insurance premiums, commitment fees
19790H1607B1930 - 5 -
1 and financing fees, as the authority determines.
2 * * *
3 Section 5. Section 13 of the act is amended to read:
4 Section 13. Bonds of an Authority.--An Authority shall have
5 power to issue bonds for any of its corporate purposes, the
6 principal and interest of which are payable from its revenues
7 generally. Any of such bonds may be secured by a pledge of any
8 revenues, including grants or contributions from the Federal or
9 State Government, or any agency, and instrumentality thereof, or
10 by a mortgage of any property of the Authority, or, in
11 connection with a residential housing program, such other
12 property or security acquired pursuant to section 9 hereof.
13 The bonds issued by an Authority are hereby declared to have
14 all the qualities of negotiable instruments under the law
15 merchant and the negotiable instruments law of the Commonwealth
16 of Pennsylvania.
17 The bonds of an Authority created under the provisions of
18 this act and the income therefrom shall at all times be free
19 from taxation for State or local purposes under any law of this
20 Commonwealth.
21 Neither the members of an Authority nor any person executing
22 the bonds shall be liable personally on any such bonds by reason
23 of the issuance thereof. Such bonds or other obligations of an
24 Authority shall not be a debt of any municipality or of the
25 Commonwealth, and shall so state on their face, nor shall any
26 municipality or the Commonwealth nor any revenues or any
27 property of any municipality or of the Commonwealth be liable
28 therefor.
29 Section 6. Sections 13.1 and 14 of the act, section 13.1
30 added and section 14 amended July 17, 1970 (P.L.496, No.173),
19790H1607B1930 - 6 -
1 are amended to read:
2 [Section 13.1. Term Bonds.--Whenever the board of any
3 Authority shall authorize the issuance of bonds under the
4 provisions of this act, the board shall also concurrently
5 provide for the authorization of term bonds in the denomination
6 of one hundred dollars ($100) payable in not more than twenty-
7 five years from the date of issue and the principal amount of
8 said term bonds shall be equal to a reasonable amount of the
9 principal amount of the bonds with which the said term bonds are
10 being concurrently authorized. The amount and term of the issue
11 of the term bonds shall be fixed by the board in the exercise of
12 its discretion. Said term bonds shall bear interest at a rate to
13 be fixed by said board not exceeding the legal rate. The term
14 bonds authorized under the Authority of this section shall be
15 subject to except as provided in this section all the terms and
16 conditions of the bonds authorized concurrently therewith.]
17 Section 13.1. Approval of Residential Housing Programs;
18 Participation of Banking Institutions.--No Authority shall issue
19 bonds to engage in a residential housing program until the
20 county or the city, as the case may be, shall have approved the
21 residential housing program with respect to which such bonds are
22 to be issued. The approval of the city or the county shall not
23 be required for the specific details of the residential housing
24 program.
25 Prior to issuing any bonds in connection with a residential
26 housing program, an Authority shall solicit the participation in
27 such program, on such reasonable terms as determined by the
28 Authority, of each financial institution with a branch in the
29 Authority's field of operation by publishing a notice of such
30 program and soliciting such participation at least thirty (30)
19790H1607B1930 - 7 -
1 days prior to issuing such bonds in a newspaper circulating
2 generally in the Authority's field of operation. Participation
3 as used herein means selling and/or servicing loans in
4 connection with residential housing programs. Nothing contained
5 herein, however, shall be construed as limiting participation in
6 any residential housing program to financial institutions with a
7 branch in the Authority's field of operation.
8 Section 14. Form and Sale of Bonds.--The bonds of an
9 Authority shall be authorized by its resolution; shall be issued
10 in one or more series; and shall bear such date, mature, at such
11 time, and bear interest at such rate, not exceeding six per
12 centum (6%) per annum, except that for a period ending on
13 October 10, 1970 the rate or rates of interest may exceed six
14 per centum (6%) per annum but shall not exceed seven per centum
15 (7%) per annum as shall be determined by the Authority as
16 necessary to issue and sell such bonds, payable semi-annually,
17 be in such denominations, be in such form, either coupon or
18 registered, be executed in such manner, be payable in such
19 medium of payment, at such place, and be subject to such terms
20 of redemption and carry such registration privileges as may be
21 provided in such resolution, or in any trust, indenture or
22 mortgage properly made in pursuance thereof.
23 The bonds of an Authority may be sold at public or private
24 sale [at not less than par and accrued interest. In case any of
25 the officers of an Authority whose signatures appear on any
26 bonds or coupons shall cease to be officers before the delivery
27 of such bonds their signatures shall, nevertheless, be valid and
28 sufficient for all purposes, the same as if such officers had
29 remained in office until such delivery.] for such price or
30 prices as the Authority may determine. The bonds shall be signed
19790H1607B1930 - 8 -
1 by or shall bear the facsimile signature of such officers as the
2 Authority shall determine, coupon bonds shall have attached
3 thereto interest coupons bearing the facsimile signature of the
4 Treasurer of the Authority, and all bonds shall be authenticated
5 by an authenticating agent, fiscal agent or trustee, all as may
6 be determined by the Authority.
7 The Authority shall have the power out of any funds available
8 therefor to purchase any bonds issued by it at a price not more
9 than the par value thereof plus accrued interest. All bonds so
10 purchased shall be cancelled. This paragraph shall not apply to
11 the redemption of bonds.
12 Any bond reciting in substance that it has been issued by an
13 Authority to accomplish the public purposes of this act shall be
14 conclusively deemed in any suit, action or proceeding involving
15 the validity or enforceability of such bond or security therefor
16 to have been issued for such purpose.
17 The interest on bonds issued with an interest rate exceeding
18 six per centum (6%) per annum shall be paid during the term for
19 which the bonds were issued and shall not be limited to the
20 specified period during which the rates in excess of six per
21 centum (6%) per annum could be determined.
22 Section 7. Section 17 of the act is amended to read:
23 Section 17. Additional Remedies Conferrable by Authority.--
24 An Authority shall have power by its resolution, trust,
25 indenture, mortgage, lease or other contract to confer upon any
26 obligees holding or representing a specified percentage in
27 bonds, or holding a lease, the right, in addition to all rights
28 that may otherwise be conferred, upon the happening of an event
29 of default as defined in such resolution or instrument, by suit,
30 action or proceeding in any court of competent jurisdiction.--
19790H1607B1930 - 9 -
1 (a) To obtain the appointment of a receiver of any real
2 property of the Authority and of the rents and profits
3 therefrom. If such receiver be appointed, he may enter and take
4 possession of such real property, operate the same and collect
5 and receive all revenues or other income thereafter arising
6 therefrom, and shall keep such moneys in a separate account and
7 apply the same in accordance with the obligations of the
8 Authority as the court shall direct. Further, any receiver or
9 trustee shall have the right to sell, assign, mortgage or
10 otherwise dispose of any assets or rights of any Authority
11 pledged to, granted to, assigned to, purchased by or otherwise
12 acquired by an Authority pursuant to section 9 hereof.
13 (b) To require the Authority, and the members thereof, to
14 account as if it and they were the trustees of an express trust.
15 Section 8. The act is amended by adding a section to read:
16 Section 19.1. Construction of Act.--(a) Nothing contained
17 in this act shall be deemed to alter, amend or repeal the act of
18 June 13, 1978 (P.L.466, No.64), entitled "An act amending the
19 act of July 14, 1970 (P.L.485, No.165), entitled 'An act
20 removing for a limited time the statutory limits imposed upon
21 interest rates and interest costs to be paid on obligations
22 issued by State and local governments, authorities, agencies and
23 instrumentalities,' changing the time limit."
24 (b) This amendatory act is to be construed as providing
25 clarification and confirmation as to the existing power and
26 duties of the Authority and its existing powers with respect to
27 the issuance of bonds. Nothing herein should be so construed as
28 to imply that any activities resembling residential housing
29 programs heretofore undertaken by an Authority prior to the
30 passage of this amendatory act were outside the purposes and
19790H1607B1930 - 10 -
1 powers of the act of May 24, 1945 (P.L.991, No.385).
2 Section 9. This act shall take effect immediately.
C23L6RZ/19790H1607B1930 - 11 -