SENATE AMENDED
PRIOR PRINTER'S NOS. 2375, 2560, 3628, PRINTER'S NO. 3757
3715
No. 1832 Session of 1985
INTRODUCED BY SWEET, MANDERINO, McVERRY, D. R. WRIGHT,
LESCOVITZ, HALUSKA, LEVDANSKY, MRKONIC, VAN HORNE, COY,
BELFANTI, BLAUM, DALEY, MICHLOVIC, JOSEPHS, KOSINSKI, DAWIDA,
JOHNSON, CARN, FOX, GEIST, PISTELLA, PRATT, KASUNIC, BURD,
TRUMAN AND FISCHER, OCTOBER 22, 1985
AS AMENDED ON THIRD CONSIDERATION, IN SENATE, JUNE 23, 1986
AN ACT
1 Providing for tax-exempt bonds; and imposing powers and duties <--
2 on the Secretary of Commerce.
3 AMENDING THE ACT OF DECEMBER 20, 1985 (P.L.483, NO.113), <--
4 ENTITLED "AN ACT PROVIDING FOR TAX-EXEMPT BONDS; AND IMPOSING
5 POWERS AND DUTIES ON THE SECRETARY OF COMMERCE," FURTHER
6 PROVIDING FOR SELECTION OF PROJECTS USING COUNTY ALLOCATIONS; <--
7 AND ADDING PROVISIONS RELATING TO CHANGES IN FEDERAL LAW.
8 The General Assembly of the Commonwealth of Pennsylvania
9 hereby enacts as follows:
10 Section 1. Short title. <--
11 This act shall be known and may be cited as the Tax-Exempt
12 Bond Allocation Act.
13 Section 2. Purpose.
14 A tax-exempt bond allocation formula is established in
15 response to restrictions imposed by amendments to the Internal
16 Revenue Code of 1954 (68A Stat. 3, 26 U.S.C. § 1 et seq.).
17 Because of the limits on the amounts of tax-exempt bond funding
18 available, this act is intended to use the restricted funding
1 available in order to:
2 (1) Create career-oriented net new jobs or preserve jobs
3 at an income level high enough to support an individual and
4 the individual's dependents.
5 (2) Increase and diversify the manufacturing base of
6 this Commonwealth.
7 (3) Aid in the expansion of existing private companies,
8 particularly those which sell their products outside this
9 Commonwealth.
10 (4) Attract new industries with new products into
11 distressed areas within this Commonwealth.
12 (5) Prepare the necessary personnel, through a program
13 of educational financial assistance to postsecondary
14 students, their families and others providing educational
15 opportunities to students and their families, to assume the
16 manpower and administrative leadership roles required to
17 carry out the objectives of paragraphs (1) through (4).
18 Section 3. Definitions.
19 The following words and phrases when used in this act shall
20 have the meanings given to them in this section unless the
21 context clearly indicates otherwise:
22 "Exempt facilities." Projects which are determined by the
23 Federal Government not to be subject to small-issue project
24 limitations. Examples may be pollution control facilities,
25 airports and waste-disposal sites.
26 "Net new job." A full-time job, or its equivalent, which
27 increases the number of jobs at the project site above the
28 number of jobs present before the project is started. The term
29 does not include a job which:
30 (1) Is being relocated from within this Commonwealth.
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1 (2) Is created by the construction of the project.
2 (3) Is not designed to be permanent.
3 "Project." An activity for which tax-exempt bonds may be
4 used.
5 "Secretary." The Secretary of Commerce of the Commonwealth.
6 "Tax-exempt bonds." Private activity and other bonds and
7 financings which count against the State ceiling defined in the
8 Internal Revenue Code of 1954 (68A Stat. 3, 26 U.S.C. § 1 et
9 seq.).
10 Section 4. Selection of projects.
11 (a) Projects using county allocations.--
12 (1) Except under paragraph (2), the secretary shall not
13 approve bond projects under the act of August 23, 1967
14 (P.L.251, No.102), known as the Industrial and Commercial
15 Development Authority Law, for:
16 (i) Office buildings in which 75% or less of the
17 square footage has guaranteed occupancy. This
18 subparagraph does not apply to office buildings used to
19 house regional or national corporate headquarters.
20 (ii) Office buildings whose primary tenants will be
21 doctors, lawyers, accountants or other professionals whom
22 the secretary designates in regulations promulgated under
23 section 6(4).
24 (iii) Projects which will not generate at least one
25 net new job or preserve one full-time job for every
26 $50,000 of bond authority.
27 (iv) Projects which require over $5,000,000 in tax-
28 exempt bonds.
29 (v) Projects whose beneficiary has outstanding tax-
30 exempt bond indebtedness for a project which was
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1 initiated after January 1, 1984, and which does not meet
2 job projections within two years following its
3 completion.
4 (2) The secretary may waive the exclusions in paragraph
5 (1)(i) through (iv) for reasons specified by the secretary in
6 the semiannual report under section 7(3). The secretary shall
7 make the waiver under this paragraph for projects located
8 within enterprise development areas, as certified by the
9 Secretary of Community Affairs under 16 Pa.Code Ch. 23
10 (relating to enterprise development area initiative), or
11 within communities which have been designated as Federal
12 disaster relief areas, for the entire period of such Federal
13 designation, provided that such projects are reasonably
14 related to the replacement, reconstruction or rehabilitation
15 of facilities or equipment destroyed or damaged by natural
16 disaster. The secretary shall consider the economic distress
17 of the area when deciding on a waiver.
18 (b) Projects set aside by secretary.--To fund projects that
19 do not use county allocations and to fund projects under section
20 5(a)(2)(ii) and (iii), (b)(1)(ii), and (c), the secretary shall
21 use the following criteria:
22 (1) Size of the project, particularly as it compares to
23 the individual county's allocation.
24 (2) Number of net new jobs created.
25 (3) Economic distress of the area, determined by its
26 unemployment rate and its median income.
27 (4) Amount of private funds leveraged by the tax-exempt
28 bond funding.
29 (5) Coordination with economic development plans of the
30 Commonwealth and of municipalities and regions.
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1 Section 5. Allocation.
2 (a) Initial allocation.--By December 1 of each year, the
3 secretary shall allocate the tax-exempt bond authority for the
4 following calendar year according to the following:
5 (1) Seventy percent shall be allocated for use inside
6 the borders of each county in this Commonwealth. If the local
7 authority resides outside of the county which contains the
8 project site, no project shall be approved without written
9 approval of the highest elected officials in that county. The
10 following is the allocation formula:
11 (i) The secretary shall determine the ratio of tax-
12 exempt bond usage of the county to the tax-exempt bond
13 usage of all counties for the two most recently completed
14 calendar years, excluding projects for which the tax-
15 exempt financing exceeds $5,000,000.
16 (ii) The secretary shall determine the ratio of the
17 average number of unemployed individuals in the county to
18 the average number of unemployed individuals in all
19 counties for the most recent 12 months for which revised
20 unemployment statistics are available.
21 (iii) The secretary shall multiply the ratio
22 determined in subparagraph (ii) by two.
23 (iv) The secretary shall add the ratio determined in
24 subparagraph (i) to the product determined in
25 subparagraph (iii).
26 (v) The secretary shall divide the sum determined in
27 subparagraph (iv) by three.
28 (vi) The secretary shall multiply the quotient
29 determined in subparagraph (v) by the total amount
30 available to be allocated under this paragraph.
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1 (2) Thirty percent shall be set aside by the secretary
2 for the following purposes:
3 (i) Use by Commonwealth agencies, except for the
4 Pennsylvania Higher Education Assistance Agency, which
5 require the use of tax-exempt bonds.
6 (ii) Projects which require more than $5,000,000 in
7 bond authority and which are determined by the secretary
8 to be exceptional in furthering the purposes of this act.
9 (iii) Exempt facilities projects.
10 (iv) Use by the Pennsylvania Higher Education
11 Assistance Agency. The agency shall, on or before
12 February 1 of each year, provide the secretary with a
13 report justifying requests for bond authority in that
14 year. Notwithstanding section 4(3) of the act of August
15 7, 1963 (P.L.549, No.290), referred to as the
16 Pennsylvania Higher Education Assistance Agency Act, the
17 secretary has the sole authority to determine the amount
18 of the request which may actually be used by the agency.
19 (b) Reallocation.--
20 (1) On July 1 of each year, the secretary shall allocate
21 unused tax-exempt bond authority as follows:
22 (i) Eighty percent shall be allocated on the basis
23 of the following formula:
24 (A) The secretary shall determine the ratio of
25 tax-exempt bond usage of the county to the tax-exempt
26 bond usage of all counties for the two most recently
27 completed calendar years, excluding projects for
28 which the tax-exempt financing exceeds $5,000,000.
29 (B) The secretary shall multiply the ratio
30 determined in clause (A) by the total amount
19850H1832B3757 - 6 -
1 available to be allocated under this subparagraph.
2 (ii) Twenty percent shall be retained by the
3 secretary for a contingency reserve, which the secretary
4 may use for projects under subsection (a)(2). Requests
5 submitted under subsection (a)(2)(iv) after February 1 of
6 each year and unfunded requests under subsection
7 (a)(2)(iv) shall be funded through the contingency
8 reserve, in addition to being funded under subsection
9 (c).
10 (2) As used in this subsection the term "unused tax-
11 exempt bond authority" means the total tax-exempt bond
12 allocation for the Commonwealth, minus the amount allocated
13 to approved projects under subsection (a).
14 (c) Final allocation.--On November 1 of each year, the
15 secretary shall allocate unused bond authority at the discretion
16 of the secretary. Projects shall be evaluated according to the
17 purposes set forth in section 2, and the failure to comply with
18 deadlines established in this section shall not render an
19 applicant ineligible for funds in the final allocation process.
20 Requests submitted under subsection (a)(2)(iv) after February 1
21 of each year and unfunded requests under subsection (a)(2)(iv)
22 shall be funded under this subsection, in addition to being
23 funded under subsection (b)(1)(ii).
24 Section 6. Federal law change.
25 In the event that Federal law regulating tax-exempt bonds is
26 changed, and that such change would, in the opinion of the
27 secretary, conflict with this act in such a way as to impair the
28 ability of the Commonwealth to use tax-exempt bonds to their
29 maximum benefit, the secretary shall have the power to
30 promulgate regulations which become effective when the Federal
19850H1832B3757 - 7 -
1 law takes effect and which shall enable the Commonwealth to
2 utilize tax-exempt bonds to their maximum benefit, and which
3 shall, to the largest extent possible, carry out the purposes
4 set forth in this act.
5 Section 7. Powers and duties of secretary.
6 The secretary has the following powers and duties:
7 (1) Distribute to local authorities model guidelines for
8 the local authorities to use in carrying out the priorities
9 and other provisions of this act.
10 (2) Notify affected Commonwealth agencies and
11 authorities of their bond allocations within 15 days of
12 deadlines under section 5. The notice under this paragraph
13 shall include a justification of the allocation and the
14 numbers used in the formula applicable to the allocation of
15 the agency or authority.
16 (3) Submit reports to the Chief Clerk of the House of
17 Representatives and the Secretary of the Senate within 45
18 days of January 1 and within 45 days of July 1 of each year.
19 Reports shall include:
20 (i) A list of projects approved, disapproved and
21 pending. The list shall contain, for each request:
22 (A) Amount.
23 (B) Location.
24 (C) Estimated jobs.
25 (D) Issuing authority or Commonwealth agency.
26 (E) Section of this act under which bond
27 authority was given.
28 (ii) The most recent report submitted to the
29 secretary by the Pennsylvania Higher Education Assistance
30 Agency under section 5(a)(2)(iv), the reasons for
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1 approval or disapproval of the request and a cash flow
2 projection of all bonds issued by the agency.
3 (iii) The model guidelines under paragraph (1).
4 (iv) Other information which the secretary deems
5 pertinent, including suggested changes to the program.
6 (4) Promulgate regulations to carry out the purposes set
7 forth in section 2.
8 Section 8. Effective date.
9 (a) Initial allocation.--Section 5(a) shall take effect
10 November 30, 1985, or immediately, whichever is later.
11 (b) Notice.--Section 7(2) shall take effect December 1,
12 1985, or immediately, whichever is later.
13 (c) Remainder.--The remainder of this act shall take effect
14 January 1, 1986, or immediately, whichever is later.
15 SECTION 1. SECTION 4(A)(1)(I) OF THE ACT OF DECEMBER 20, <--
16 1985 (P.L.483, NO.113), KNOWN AS THE TAX-EXEMPT BOND ALLOCATION
17 ACT, IS AMENDED TO READ:
18 SECTION 4. SELECTION OF PROJECTS.
19 (A) PROJECTS USING COUNTY ALLOCATIONS.--
20 (1) EXCEPT UNDER PARAGRAPH (2), THE SECRETARY SHALL NOT
21 APPROVE BOND PROJECTS UNDER THE ACT OF AUGUST 23, 1967
22 (P.L.251, NO.102), KNOWN AS THE INDUSTRIAL AND COMMERCIAL
23 DEVELOPMENT AUTHORITY LAW, FOR:
24 (I) PROJECTS RELATED TO THE RETAIL SALE OF CONSUMER
25 GOODS, EXCEPT THAT NO MORE THAN $1,000,000 OR 5% OF THE
26 ALLOCATION OF EACH COUNTY, WHICHEVER IS GREATER, AS
27 PROVIDED BY SECTION 5(A)(1), MAY BE UTILIZED FOR SUCH
28 PROJECTS, AND THE AMOUNT FINANCED IN ANY SUCH PROJECT MAY
29 NOT EXCEED $1,000,000.
30 * * *
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1 SECTION 2. SECTION 6 OF THE ACT IS AMENDED TO READ:
2 SECTION 6. FEDERAL LAW CHANGE.
3 (A) PROMULGATION OF REGULATIONS.--IN THE EVENT THAT FEDERAL
4 LAW REGULATING TAX-EXEMPT BONDS IS CHANGED AND THAT SUCH CHANGE
5 WOULD, IN THE OPINION OF THE SECRETARY, CONFLICT WITH THIS ACT
6 IN SUCH A WAY AS TO IMPAIR THE ABILITY OF THE COMMONWEALTH TO
7 USE TAX-EXEMPT BONDS TO THEIR MAXIMUM BENEFIT, THE SECRETARY
8 SHALL, WITH THE APPROVAL OF THE GOVERNOR, HAVE THE POWER TO
9 PROMULGATE REGULATIONS WHICH BECOME EFFECTIVE WHEN THE FEDERAL
10 LAW TAKES EFFECT AND WHICH SHALL ENABLE THE COMMONWEALTH TO
11 UTILIZE TAX-EXEMPT BONDS TO THEIR MAXIMUM BENEFIT AND WHICH
12 SHALL, TO THE LARGEST EXTENT POSSIBLE, CARRY OUT THE PURPOSES
13 SET FORTH IN THIS ACT. PROVISIONS OF THIS ACT MAY BE SUSPENDED
14 BY THE SECRETARY TO THE EXTENT DEEMED NECESSARY TO IMPLEMENT THE
15 REGULATIONS AUTHORIZED BY THIS SUBSECTION.
16 (B) STANDBY ALLOCATION.--IN THE EVENT THAT THE PENDENCY OF
17 ANY PROPOSED FEDERAL LEGISLATION, INCLUDING, BUT NOT LIMITED TO,
18 H.R. 3838, KNOWN AS THE TAX REFORM ACT OF 1985, CONFLICTS WITH
19 THIS ACT IN SUCH A WAY AS TO IMPAIR THE ABILITY OF THE
20 COMMONWEALTH TO USE TAX-EXEMPT BONDS TO THEIR MAXIMUM BENEFIT,
21 THE GOVERNOR SHALL ADOPT AS AN EXECUTIVE ORDER A STANDBY
22 ALLOCATION OF TAX-EXEMPT BORROWING AUTHORITY TO BE IN EFFECT
23 DURING THE PENDENCY OF ANY SUCH FEDERAL LEGISLATION. ANY STANDBY
24 ALLOCATIONS SHALL BE PROVIDED IN ADDITION TO ALLOCATIONS MADE
25 PURSUANT TO OTHER PROVISIONS OF THIS ACT OR PURSUANT TO ARTICLE
26 IV-B OF THE ACT OF DECEMBER 3, 1959 (P.L.1688, NO.621), KNOWN AS
27 THE HOUSING FINANCE AGENCY LAW AND SHALL COMPLY WITH ANY PENDING
28 FEDERAL REQUIREMENTS, INCLUDING, BUT NOT LIMITED TO, THE UNIFIED
29 VOLUME LIMITATION PROVIDED BY SECTION 145 OF H.R. 3838. STANDBY
30 ALLOCATIONS SHALL ENABLE THE COMMONWEALTH TO UTILIZE TAX-EXEMPT
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1 BONDS TO THEIR MAXIMUM BENEFIT AND SHALL, TO THE LARGEST EXTENT
2 POSSIBLE, CARRY OUT THE PURPOSES SET FORTH IN THIS ACT. IN THE
3 EVENT ANY STANDBY ALLOCATIONS PROVIDED BY THIS SUBSECTION ARE
4 SUPERSEDED BY REGULATIONS ADOPTED PURSUANT TO SUBSECTION (A) OF
5 THIS SECTION, SUCH REGULATIONS SHALL, TO THE FULLEST EXTENT
6 OTHERWISE PERMISSIBLE UNDER STATE AND FEDERAL LAW, GIVE FULL
7 FORCE AND EFFECT TO ANY STANDBY ALLOCATIONS. FOR THE PURPOSE OF
8 PROVIDING STANDBY ALLOCATIONS PURSUANT TO H.R. 3838, THIS
9 SUBSECTION SHALL BE DEEMED TO OVERRIDE THE SPECIFIED PERCENTAGE
10 SET-ASIDE FOR HOUSING RELATED BONDS PROVIDED BY SECTION 145(H)
11 OF H.R. 3838. ANY ALLOCATIONS MADE BY THE EXECUTIVE ORDER
12 PURSUANT TO THIS SUBSECTION IN RESPONSE TO THE PENDENCY OF H.R.
13 3838 SHALL PROVIDE THE FOLLOWING:
14 (1) AN ALLOCATION OF AN AMOUNT EQUAL TO $25 MULTIPLIED
15 BY THE POPULATION OF PENNSYLVANIA FOR "QUALIFIED 501(C)(3)
16 BONDS" AS DEFINED BY SECTION 144(B) OF H.R. 3838.
17 (2) AN INITIAL ALLOCATION OF $300,000,000 TO THE BOARD
18 OF THE HOUSING FINANCE AGENCY TO BE FURTHER ALLOCATED BY THE
19 BOARD FOR ITS OWN USE OR TO OTHER ISSUES FOR "HOUSING RELATED
20 BONDS" AS DEFINED BY SECTION 145(H) OF H.R. 3838.
21 (3) THE INITIAL ALLOCATION OF THE REMAINDER OF THE
22 VOLUME CAP PROVIDED BY SECTION 145 OF H.R. 3838 IN THE SAME
23 MANNER IN WHICH TAX-EXEMPT BOND AUTHORITY IS ALLOCATED
24 PURSUANT TO SECTION 5(A) OF THIS ACT.
25 (4) THE REALLOCATION TO ANY TYPE OF ELIGIBLE PROJECT OF
26 ANY UNUTILIZED INITIAL ALLOCATIONS PROVIDED BY PARAGRAPH (3)
27 OF THIS SUBSECTION IN THE MANNER PROVIDED BY SECTION 5(B) AND
28 (C) OF THIS ACT AND THE REALLOCATION TO ANY TYPE OF ELIGIBLE
29 PROJECT OF ANY UNUTILIZED ALLOCATIONS PROVIDED BY PARAGRAPH
30 (2) OF THIS SUBSECTION AT THE DISCRETION OF THE BOARD OF THE
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1 HOUSING FINANCE AGENCY, BUT NOT LATER THAN NOVEMBER 1, 1986.
2 (5) THAT STANDBY ALLOCATIONS SHALL BE MADE FIRST TO ALL
3 TAX-EXEMPT BONDS ISSUED PRIOR TO THE EFFECTIVE DATE OF THIS
4 SECTION, PROVIDED THAT THE ISSUER FILES OR HAS ON FILE WITH
5 THE SECRETARY A COPY OF THE INTERNAL REVENUE SERVICE FORM
6 8038 FILED WITH THE FEDERAL GOVERNMENT WITH RESPECT TO SUCH
7 BONDS WITHIN 30 DAYS AFTER SUCH EFFECTIVE DATE.
8 SECTION 3. THE AMENDMENTS TO SECTION 6 SECTION 6(B) OF THE <--
9 ACT RELATING TO FEDERAL LAW CHANGES SHALL EXPIRE JANUARY 31,
10 1987, UNLESS EXTENDED BY STATUTE.
11 SECTION 4. THIS ACT SHALL TAKE EFFECT IMMEDIATELY.
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