PRIOR PRINTER'S NOS. 2152, 2395, 2455, PRINTER'S NO. 2624
2548
No. 1727 Session of 1987
INTRODUCED BY DUFFY, F. TAYLOR, GALLEN, SEVENTY, HAGARTY,
VAN HORNE, SERAFINI, OLASZ, BURD, J. L. WRIGHT, DORR, GEIST,
GODSHALL AND CALTAGIRONE, SEPTEMBER 28, 1987
AS AMENDED ON THIRD CONSIDERATION, HOUSE OF REPRESENTATIVES,
DECEMBER 7, 1987
AN ACT
1 Amending the act of May 17, 1956 (1955 P.L.1609, No.537),
2 entitled "An act to promote the welfare of the people of the
3 Commonwealth by the reduction of unemployment in certain
4 areas of the Commonwealth determined to be critical economic
5 areas; providing for the establishment of industrial
6 development projects in such areas; creating The Pennsylvania
7 Industrial Development Authority as a body corporate and
8 politic with power to allocate funds for and make secured
9 loans to industrial development agencies for the payment of a
10 part of the cost of industrial development projects in
11 critical economic areas; authorizing the Authority to enter
12 into agreements with the Government of the United States or
13 any Federal agency or industrial development agency;
14 empowering the Authority to take title to, sell, convey and
15 lease industrial development projects where necessary to
16 protect loans made by the Pennsylvania Industrial Development
17 Authority on industrial development projects; providing that
18 no debt of the Commonwealth, its municipalities or political
19 subdivisions shall be incurred in the exercise of any powers
20 granted by this act; and providing for the examination of the
21 accounts and affairs of the Authority; and making an
22 appropriation," adding and amending certain definitions;
23 permitting certain board members to designate others to
24 exercise their powers as board members; providing for
25 forfeiture of a board member's seat for unexcused absences
26 from meetings; PROVIDING FOR FINANCIAL STATEMENTS OF <--
27 INDUSTRIAL DEVELOPMENT AGENCIES; making editorial changes;
28 providing for loans for industrial parks and multiple-tenancy
29 building projects; authorizing the Authority to require
30 additional security for loans; deleting a requirement that
31 all loan repayments be deposited in the Industrial
1 Development Fund; and requiring the Authority to promulgate
2 regulations.
3 The General Assembly of the Commonwealth of Pennsylvania
4 hereby enacts as follows:
5 Section 1. Section 3(d) of the act of May 17, 1956 (1955
6 P.L.1609, No.537), known as the Pennsylvania Industrial
7 Development Authority Act, amended May 15, 1980 (P.L.131,
8 No.49), is amended and the section is amended by adding clauses
9 to read:
10 Section 3. Definitions.--The following terms, whenever used
11 or referred to in this act, shall have the following meanings,
12 except in those instances where the context clearly indicates
13 otherwise:
14 * * *
15 (d) The term "critical economic area" shall mean the area
16 encompassing any municipality or group of municipalities,
17 county, group of counties or region of the Commonwealth
18 reasonably defined by the Authority wherein critical conditions
19 of unemployment, economic depression, wide-spread reliance on
20 public assistance and unemployment compensation are found to
21 exist by the Authority. Prior to determination and designation
22 of any area of the Commonwealth as a critical economic area the
23 Authority shall conduct such investigations of the area and of
24 the records and statistical indices of the Department of Labor
25 and Industry, as well as the declarations and statistics of any
26 other State or Federal agencies as shall be necessary to
27 establish the existence of the above conditions in such area and
28 to establish that: (i) an average of not less than (6%) of the
29 labor force of such area has been unemployed for any five years
30 of the preceding ten years, hereinafter designated "critical
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1 economic area A"; or (ii) an average of not less than (4%) of
2 the labor force of such area has been unemployed for [a period
3 of not less than twelve months] the preceding calendar year,
4 hereinafter designated "critical economic area B"; or (iii) an
5 average of not less than 4% of the labor force of such area has
6 been unemployed for any five years of the preceding ten years,
7 hereinafter designated "critical economic area C," immediately
8 prior to the date of such investigations and findings utilized
9 by the Authority. No area of the Commonwealth shall be
10 designated a critical economic area without such investigations
11 and findings having been first made and certified to in the
12 permanent records of the Authority. An area of the Commonwealth
13 having once been designated a critical economic area A or area C
14 shall remain so for a period of six months following the month
15 in which it ceases to qualify as a critical economic area as
16 above defined and designated by the Authority. The Authority may
17 designate critical economic areas annually for each fiscal year
18 of the Commonwealth based on investigations and findings for the
19 previous calendar year, or for periods of less than one year, at
20 the discretion of the Authority.
21 * * *
22 (t) The term "industrial parks" shall mean land areas
23 acquired, including existing buildings previously erected
24 thereon, said land areas, excluding existing buildings, if any,
25 improved and prepared by industrial development agencies in
26 accordance with plans and specifications as approved by the
27 Authority as sites for the establishment thereon of two or more
28 industrial development projects by industrial development
29 agencies in a redevelopment area or a critical economic area.
30 (u) The term "multiple-tenancy building project" shall mean
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1 any land, site, structure, facility or undertaking acquired or
2 constructed for occupancy by two or more industrial enterprises,
3 manufacturing enterprises or research and development
4 enterprises, as those terms are defined in this act, established
5 or to be established by an industrial development agency in a
6 critical economic area.
7 Section 2. Section 4 of the act, amended June 16, 1972
8 (P.L.475, No.153), is amended to read:
9 Section 4. The Pennsylvania Industrial Development
10 Authority.--There is hereby created a body corporate and
11 politic, constituting a public corporation and government
12 instrumentality by the name of "The Pennsylvania Industrial
13 Development Authority," the board of members of which shall be
14 composed of the following: The Secretary of Commerce or his or
15 her named designee, who will serve as Chairman, the Secretary of
16 Labor and Industry or his or her named designee, the Secretary
17 of Community Affairs or his or her named designee, the Secretary
18 of Agriculture or his or her named designee and the Secretary of
19 Banking or his or her named designee and their respective
20 successors in office and seven additional members who shall be
21 appointed by the Governor with the advice and consent of the
22 Senate who shall represent the general public and the public
23 interest. The members of the Authority initially appointed by
24 the Governor shall continue in office for terms of one to seven
25 years, respectively, from the date of their appointment and
26 until their respective successors shall be duly appointed and
27 qualified, the term of each appointed member to be designated by
28 the Governor at the time of his appointment; but their
29 successors shall each be appointed for a term of seven years,
30 except that any person appointed to fill a vacancy shall serve
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1 only for the unexpired term, and any appointed member of the
2 Authority shall be eligible for re-appointment. Said members of
3 the Authority shall be entitled to no compensation for their
4 services as members, but shall be entitled to [reimbursement for
5 all necessary expenses incurred in connection with the
6 performance of their duties as members.] receive the amount of
7 reasonable traveling, hotel and other expenses incurred in the
8 performance of their duties in accordance with Commonwealth
9 regulations. An appointed member of the board who fails to
10 attend three consecutive meetings shall forfeit his or her seat
11 unless the chairman, upon written request of the member, finds
12 that the member should be excused from attending a meeting
13 because of illness or the death of an immediate family member.
14 Section 3. Section 5(h) and (p) of the act, amended July 10,
15 1963 (P.L.221, No.125), are amended AND THE SECTION IS AMENDED <--
16 BY ADDING A CLAUSE to read:
17 Section 5. Powers of the Authority; General.--The Authority,
18 as a public corporation and governmental instrumentality
19 exercising public powers of the Commonwealth, is hereby granted
20 and shall have and may exercise all powers necessary or
21 appropriate to carry out and effectuate the purposes of this
22 act, including the following powers, in addition to others
23 herein granted:
24 * * *
25 (h) To make, upon proper application of industrial
26 development agencies, loans to such industrial development
27 agencies of moneys held in the Industrial Development Fund or
28 other accounts of the Authority for industrial development
29 projects in critical economic areas and to provide for the
30 repayment and redeposit of such allocations and loans in the
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1 manner hereinafter provided;
2 * * *
3 (p) To take title by foreclosure to any industrial
4 development project where such acquisition is necessary to
5 protect any loan previously made therefor by the Authority and
6 to pay all costs arising out of such foreclosure and acquisition
7 from moneys held in the Industrial Development Fund or other
8 accounts of the Authority and to sell, transfer and convey any
9 such industrial development project to any responsible buyer; in
10 the event such sale, transfer and conveyance cannot be effected
11 with reasonable promptness, the Authority may, in order to
12 minimize financial losses and sustain employment, lease such
13 industrial development project to a responsible tenant or
14 tenants; the Authority shall not lease industrial development
15 projects except under the conditions and for the purposes cited
16 in this section.
17 * * *
18 (S) TO REQUIRE ANY AGENCY THAT HAS BEEN CERTIFIED BY THE <--
19 AUTHORITY TO FILE AN ANNUAL FINANCIAL STATEMENT. AFTER REVIEWING
20 THE FINANCIAL STATEMENT, THE AUTHORITY SHALL HAVE THE POWER TO
21 REQUEST AN INDEPENDENT AUDIT OF THE AGENCY'S RECORDS WITH
22 RESPECT TO TRANSACTIONS WITH THE AUTHORITY.
23 Section 4. Section 6 of the act, reenacted and amended
24 December 19, 1975 (P.L.591, No.166) and amended May 15, 1980
25 (P.L.131, No.49), is amended to read:
26 Section 6. Powers of the Authority; Loans to Industrial
27 Development Agencies.--When it has been determined by the
28 Authority upon application of an industrial development agency
29 and hearing thereon in the manner hereinafter provided, that the
30 establishment of a particular industrial development project of
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1 such industrial development agency in a critical economic area
2 has accomplished or will accomplish the public purposes of this
3 act, the Authority may contract to loan such industrial
4 development agency an amount not in excess of the percentage of
5 the cost of such industrial development project, as established
6 or to be established as hereinafter set forth, subject, however,
7 to the following conditions:
8 (a) Industrial development projects to be established:
9 (1) If the industrial development project is exclusively a
10 research and development facility other than research and
11 development of pollution control technology, the Authority may,
12 in each class of critical economic area, contract to loan the
13 industrial development agency (45%) of the cost of such
14 industrial development project if it has determined that the
15 industrial development agency holds funds or property in an
16 amount or value equal to not less than (5%) of the cost of
17 establishing the industrial development project, which funds or
18 property are available for and shall be applied to the
19 establishment of such project. If the industrial development
20 project is exclusively a research and development facility for
21 technology concerning pollution control, the Authority may
22 contract to loan the industrial development agency in critical
23 economic area A an amount not in excess of (55%) and in a
24 critical economic area B or a critical economic area C an amount
25 not in excess of (50%) of the cost of the industrial development
26 project: Provided, however, That in each such instance, the
27 Authority has determined that the industrial development agency
28 holds funds or property in an amount or value equal to not less
29 than (5%) of the cost of establishing the industrial development
30 project, which funds or property are available for and shall be
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1 applied to the establishment of such project.
2 (2) If the industrial development project is any other type
3 of industrial development project than exclusively a research
4 and development facility, the Authority may, in critical
5 economic area A contract to loan the industrial development
6 agency an amount not in excess of (40%) of the cost of such
7 industrial development project if it has determined that the
8 industrial development agency holds funds or property in an
9 amount or value equal to not less than (10%) of the cost of
10 establishing the industrial development project, which funds or
11 property are available for and shall be applied to establishment
12 of such project.
13 (2.1) Where a contract to loan to an industrial development
14 agency is to be made under provisions of subsection (a), the
15 following shall apply: that, in critical economic areas A, B or
16 C where an average of (8%) or more of the labor force has been
17 unemployed for the preceding calendar year, the Authority may
18 contract to loan the industrial development agency an amount not
19 in excess of (50%) of the cost of an industrial development
20 project and an amount not in excess of (60%) of the cost of an
21 industrial development project wherein the responsible buyer or
22 tenant is a small business on the date of the application; and
23 where an average of (10%) or more of the labor force has been
24 unemployed for the preceding calendar year, the Authority may
25 contract to loan the industrial development agency an amount not
26 in excess of (60%) of the cost of an industrial development
27 project and an amount not in excess of (70%) of the cost of an
28 industrial development project wherein the responsible buyer or
29 tenant is a small business on the date of application; further,
30 provided that in each such instance the industrial development
19870H1727B2624 - 8 -
1 agency project percentage shall be removed. Where a contract to
2 loan to an industrial development agency is to be made under the
3 provisions of subsection (a), the following shall apply: that,
4 in critical economic areas A, B or C where an average of (4%) or
5 more of the labor force has been unemployed for the preceding
6 calendar year, the Authority may contract to loan the industrial
7 development agency an amount not in excess of (40%) of the cost
8 of an industrial development project wherein the responsible
9 buyer or tenant is a small business and where an average of (6%)
10 or more of the labor force has been unemployed for the preceding
11 calendar year, the Authority may contract to loan the industrial
12 development agency an amount not in excess of (50%) of the cost
13 of an industrial development project wherein the responsible
14 buyer or tenant is a small business and in such latter instance
15 the industrial development agency project percentage shall be
16 removed.
17 (3) If the industrial development project is any other type
18 of industrial development project than exclusively a research
19 and development facility, the Authority may, in critical
20 economic areas B and C, contract to loan the industrial
21 development agency an amount not in excess of (30%) of the cost
22 of such industrial development project if it has determined that
23 the industrial development agency holds funds or property in an
24 amount or value equal to not less than (20%) of the cost of
25 establishing the industrial development project, which funds or
26 property are available for or shall be applied to the
27 establishment of such project.
28 (4) Prior to the making of any loan under this subsection
29 (a), the Authority shall have determined that the industrial
30 development agency has obtained from other independent and
19870H1727B2624 - 9 -
1 responsible sources, such as banks and insurance companies or
2 otherwise, a firm commitment for all other funds, over and above
3 the loan of the Authority and such funds or property as the
4 industrial development agency may hold, necessary for payment of
5 all of the cost of establishing the industrial development
6 project, and that the sum of all these funds, together with the
7 machinery and equipment to be provided by the responsible tenant
8 or responsible buyer, is adequate for the completion and
9 operation of the industrial development project.
10 (b) The Authority may, in critical economic areas A and B,
11 contract to loan to an industrial development agency an amount
12 not in excess of (40%) of the cost, and in critical economic
13 area C, may contract to loan to an industrial development agency
14 an amount not in excess of (30%) of the cost, of establishing an
15 industrial development project established without prior
16 Authority participation, if at the time of making such loan the
17 Authority has determined:
18 (1) That in critical economic areas A and B, the industrial
19 development agency has invested in the industrial development
20 project funds or property in an amount or value equal to not
21 less than (10%) of the cost of such industrial development
22 project and all of the costs of establishing said industrial
23 development project have been paid; and in a critical economic
24 area C, the industrial development agency has invested in the
25 industrial development project funds or property in an amount or
26 value equal to not less than (20%) of the cost of such
27 industrial development project and all costs of establishing
28 said industrial development project have been paid.
29 (2) That the industrial development project is leased or
30 sold to a responsible tenant or purchaser which has supplied the
19870H1727B2624 - 10 -
1 machinery and equipment necessary for the operation of the
2 industrial development project and is occupying the same for the
3 purposes intended.
4 (3) That neither the industrial development agency nor the
5 responsible tenant or purchaser is in default under any of the
6 agreements entered into by them in respect of the financing and
7 operation of the industrial development project.
8 (4) That there is sufficient income from the lease or
9 agreement to purchase with the industrial tenant or industrial
10 purchaser sufficient to insure the repayment of the loan of the
11 Authority made pursuant to this subsection (b).
12 (5) The proceeds of the Authority loan to the industrial
13 development agency made pursuant to this subsection (b) shall be
14 used only to pay a part of the cost of establishing an
15 industrial development project in furtherance of the public
16 purposes of this act.
17 (b.1) Industrial parks:
18 (1) The Authority may contract to loan an amount up to (60%)
19 of the cost of an industrial park project provided the
20 industrial development agency contributes not less than (10%) of
21 the cost of said projects.
22 (2) Loans shall only be made where the said loan of the
23 Authority is secured by a first mortgage on such industrial park
24 or is secured by a participation in a first mortgage thereon,
25 subject to the exception that where a Federal agency is
26 participating in the financing of an industrial park, the
27 Authority may take as security for its loan a mortgage on such
28 industrial park junior in lien only to that of the mortgage
29 given to the Federal agency. If the Authority's loan is secured
30 by a participation in a first mortgage on the industrial park,
19870H1727B2624 - 11 -
1 the Authority may permit a portion of its loan, not exceeding in
2 amount (10%) of the project cost, to be secured by a second
3 mortgage on the industrial park which is junior in lien only to
4 the participating first mortgage securing the balance of the
5 Authority's loan and the funds borrowed from other independent
6 and responsible sources.
7 (b.2) Multiple-tenancy building projects:
8 (1) The cost of the project shall include only those items
9 of cost set forth in the definition of "cost of establishing an
10 industrial development project" in this act.
11 (2) Where this act otherwise would empower the Authority to
12 contract to loan an amount up to (40%) of the cost of the
13 project, the Authority may only contract to loan such an amount
14 if the loan of the Authority is secured by a first mortgage or a
15 participation in a first mortgage on said project; otherwise the
16 Authority may contract to loan an amount not in excess of (30%)
17 of the cost of the project: Provided, however, That if the
18 Authority's loan is secured by a participation in a first
19 mortgage on the project, the Authority may permit a portion of
20 its loan, not exceeding in amount (10%) of the project cost, to
21 be secured by a second mortgage on the project which is junior
22 in lien only to the participating first mortgage securing the
23 balance of the Authority's loan and the funds borrowed from
24 other independent and responsible sources.
25 Where making a loan in the financing of an industrial park or
26 a multiple-tenancy building project, the requirements of this
27 act shall apply unless otherwise provided herein, except the
28 requirements of this act as to the proposed industrial, research
29 and development or manufacturing enterprise to be placed thereon
30 or therein, the proposed employment to be derived therefrom and
19870H1727B2624 - 12 -
1 the existence of a responsible buyer or responsible tenant
2 therefor shall not apply.
3 (e) Any such loan of the Authority shall be for such period
4 of time and shall bear interest at such rate as shall be
5 determined by the Authority and shall be [secured] evidenced by
6 bond or note of the industrial development agency and secured by
7 mortgage on the industrial development project for which such
8 loan was made, such mortgage to be second and subordinate only
9 to the mortgage securing the first lien obligation issued to
10 secure the commitment of funds from the aforesaid independent
11 and responsible sources and used in the financing of the
12 industrial development project. Loans for industrial parks and
13 multiple-tenancy building projects shall be secured as provided
14 in subsections (b.1) and (b.2), respectively. The Authority may
15 require such additional security for its loan as the board may
16 determine necessary.
17 [(f) Where a contract to loan to an industrial development
18 agency is to be made under the provisions of subsection (a), the
19 following shall apply that, in critical economic areas A, B or C
20 where an average of 8% or more of the labor force has been
21 unemployed for the preceding calendar year, the Authority may
22 contract to loan the industrial development agency an amount not
23 in excess of 50% of the cost of an industrial development
24 project and an amount not in excess of 60% of the cost of an
25 industrial development project wherein the responsible buyer or
26 tenant is a small business on the date of the application; and
27 where an average of 10% or more of the labor force has been
28 unemployed for the preceding calendar year, the Authority may
29 contract to loan the industrial development agency an amount not
30 in excess of 60% of the cost of an industrial development
19870H1727B2624 - 13 -
1 project and an amount not in excess of 70% of the cost of an
2 industrial development project wherein the responsible buyer or
3 tenant is a small business on the date of application; further,
4 provided that in each such instance the industrial development
5 agency project percentage shall be removed. Where a contract to
6 loan to an industrial development agency is to be made under the
7 provisions of subsection (a), the following shall apply: that,
8 in critical economic areas A, B or C where an average of 4% or
9 more of the labor force has been unemployed for the preceding
10 calendar year, the Authority may contract to loan the industrial
11 development agency an amount not in excess of 40% of the cost of
12 an industrial development project wherein the responsible buyer
13 or tenant is a small business and where an average of 6% or more
14 of the labor force has been unemployed for the preceding
15 calendar year, the Authority may contract to loan the industrial
16 development agency an amount not in excess of 50% of the cost of
17 an industrial development project wherein the responsible buyer
18 or tenant is a small business and in such latter instance the
19 industrial development agency project percentage shall be
20 removed.]
21 Moneys so loaned by the Authority to industrial development
22 agencies shall be withdrawn from the Industrial Development Fund
23 or other account of the Authority and paid over to the
24 industrial development agency in such manner as shall be
25 provided and prescribed by the rules and regulations of the
26 Authority.
27 [All payments of interest on said loans and the principal
28 thereof shall be deposited by the Authority in the Industrial
29 Development Fund.]
30 Loans by the Authority to an industrial development agency
19870H1727B2624 - 14 -
1 for an industrial development project shall be made only in the
2 manner and to the extent as in this section six provided,
3 except, however, in those instances wherein an agency of the
4 Federal government participates in the financing of an
5 industrial development project by loan, grant or otherwise of
6 Federal funds. When any Federal agency does so participate the
7 Authority may adjust the required ratios of financial
8 participation by the industrial development agency, the source
9 of independent funds, and the Authority in such manner as to
10 insure the maximum benefit available to the industrial
11 development agency, the Authority, or both, by the participation
12 of the Federal agency.
13 Where any Federal agency participating in the financing of an
14 industrial development project is not permitted to take as
15 security for such participation a mortgage the lien of which is
16 junior to the mortgage of the Authority, the Authority shall in
17 such instances be authorized to take as security for its loan to
18 the industrial development agency a mortgage junior in lien to
19 that of the Federal agency.
20 Before any loan is approved by the Authority, the responsible
21 tenant or purchaser must certify to the Authority that it has
22 not been cited by a governmental agency for causing pollution in
23 the Commonwealth, or if it has been so cited, that it is
24 embarked on a specific program for eliminating the cause of the
25 citation. The responsible tenant or purchaser must also certify
26 to the Authority that the proposed project would be designed so
27 as not to cause pollution in violation of existing standards.
28 In the event of the imposition of any civil or criminal
29 penalty on a specific industrial development project hereinafter
30 approved, resulting from the violation of any law or regulation
19870H1727B2624 - 15 -
1 relating to environmental pollution in the Commonwealth, the
2 responsible tenant or purchaser shall, at the request of the
3 Authority, be required to either show evidence of having entered
4 into an agreement with the appropriate governmental agency
5 providing for the required abatement, or if the violation has
6 been appealed to the courts, evidence of having complied with a
7 finally adjudicated decision of a court of law relating to the
8 violation. If the responsible tenant or purchaser shall fail to
9 show such evidence, the Pennsylvania Industrial Development
10 Authority together with the Environmental Quality Board of the
11 Department of Environmental Resources may at their discretion
12 take such action as they deem appropriate with regard to the
13 project loan.
14 Section 5. The act is amended by adding sections to read:
15 Section 7.1. Employment Projection Audits.--The Authority
16 shall implement a procedure to determine whether the employment
17 projections set out in the loan application under section 7 are
18 achieved.
19 Section 13.1. Annual Report.--Prior to July 1 of each year,
20 the Authority shall provide a report on its operation for the
21 previous calendar year to the House Business and Commerce
22 Committee and the Senate Community and Economic Development
23 Committee. Such report may be a separate report or part of any
24 other report prepared by the Authority or the Department of
25 Commerce provided that any such report include the steps taken
26 by the Authority to comply with the recommendations set forth in
27 the final report of the House Business and Commerce Committee on
28 the Sunset Evaluation and Review of the Pennsylvania Industrial
29 Development Authority (September 28, 1987).
30 Section 13.2. Regulations.--By June 30, 1988, the Authority
19870H1727B2624 - 16 -
1 shall promulgate regulations necessary to effectuate the
2 purposes of the act, including, if necessary and where
3 appropriate, flexible provisions concerning changes in items
4 subject to frequent variance including, but not limited to,
5 interest rates or other economic development factors.
6 Section 6. The act of July 6, 1961 (P.L.509, No.262), known
7 as the Pennsylvania Redevelopment Area Economic Cooperation and
8 Implementation Act, is repealed.
9 Section 7. This act, with respect to The Pennsylvania
10 Industrial Development Authority, shall constitute the
11 legislation required to reestablish the authority under the act
12 of December 22, 1981 (P.L.508, No.142), known as the Sunset Act.
13 Section 8. This act shall take effect immediately.
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