PRINTER'S NO. 2285
No. 1854 Session of 1999
INTRODUCED BY FRANKEL, JOSEPHS, LUCYK, MELIO, MICHLOVIC, PESCI,
READSHAW, RUFFING, TRELLO, VAN HORNE AND YOUNGBLOOD,
SEPTEMBER 27, 1999
REFERRED TO COMMITTEE ON CONSUMER AFFAIRS, SEPTEMBER 27, 1999
AN ACT
1 Establishing the Pennsylvania Telecommunications Economic
2 Development Authority and the Pennsylvania Telecommunications
3 Economic Development Fund; providing for the powers and
4 duties of the Pennsylvania Telecommunications Economic
5 Development Authority; and authorizing certain investments in
6 telecommunications business ventures.
7 The General Assembly finds and declares as follows:
8 (1) The telecommunications infrastructure is rapidly
9 becoming the backbone of the emerging technology-based State
10 economy.
11 (2) It is a vital interest of the Commonwealth to
12 stimulate the development of the telecommunications industry
13 and the expansion of the telecommunications infrastructure
14 within this Commonwealth.
15 The General Assembly of the Commonwealth of Pennsylvania
16 hereby enacts as follows:
17 Section 1. Short title.
18 This act shall be known and may be cited as the
19 Telecommunications Economic Development Act.
1 Section 2. Definitions.
2 The following words and phrases when used in this act shall
3 have the meanings given to them in this section unless the
4 context clearly indicates otherwise:
5 "Authority." The Pennsylvania Telecommunications Economic
6 Development Authority established pursuant to this act.
7 "Bridge financing." Financing to a company which is expected
8 to make an initial public offering of stock within the next 12
9 months, with the expectation that such funds be repaid from the
10 proceeds of that initial public offering.
11 "Cableless network provider." A carrier network that
12 provides telecommunications services to end-user subscribers in
13 which radio, microwave or infrared links take the place of
14 physical cables.
15 "Community antenna television." A television system that
16 broadcasts multiple frequency divided channels, connected to a
17 common antenna or server, through a cable.
18 "Financial manager." An organization authorized to do
19 business in this Commonwealth that:
20 (1) is authorized to act as a trustee pursuant to the
21 provisions of the Employee Retirement Income Security Act of
22 1974 (Public Law 93-406, 88 Stat. 829) or an insurance
23 company;
24 (2) (i) is licensed or chartered by the Insurance
25 Department or Department of Banking;
26 (ii) is chartered by an agency of the Federal
27 Government; or
28 (iii) is subject to the jurisdiction of the Federal
29 Securities and Exchange Commission; and
30 (3) provides or secures venture capital.
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1 "First stage." Financing for companies that are beyond the
2 start-up phase, that have expended their initial capital and
3 require funds to initiate commercial manufacturing and sales.
4 "Fund." The Pennsylvania Telecommunications Economic
5 Development Fund established in section 6.
6 "Local access provider." An entity authorized by the
7 Federal, State or local government to provide access to a
8 telecommunications network to an end-user subscriber of that
9 service at the subscriber's residence or place of business.
10 "Local exchange telecommunications company." A carrier that
11 is authorized by the Federal Communications Commission to
12 provide local telecommunications services.
13 "Second stage." Working capital for the initial expansion of
14 a company that is producing a product or service and that may
15 have accounts receivable but may not yet be showing a profit.
16 "Telecommunications." Any process that permits the passage
17 of data, voice or video information from a sender to one or more
18 receivers in any usable form by means of an electromagnetic
19 system, whether or not a cable is involved.
20 "Venture capital." A financial investment that results in
21 the acquisition of equity interests or a combination of debt and
22 equity interests which is expected to grow substantially in the
23 future and in which the expected return on investment is to come
24 predominantly from an increase in the value of the equity
25 interests.
26 Section 3. Pennsylvania Telecommunications Economic Development
27 Authority.
28 (a) Authority established.--The Pennsylvania
29 Telecommunications Economic Development Authority is hereby
30 established as a body corporate and politic, with corporate
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1 succession.
2 (b) Board of directors.--The authority shall be governed and
3 all of its corporate powers exercised by a board of directors
4 that shall be composed of the following individuals:
5 (1) The State Treasurer.
6 (2) The Auditor General.
7 (3) The Secretary of Community and Economic Development.
8 (4) The chairman of the Public Utility Commission.
9 (5) Four members of the General Assembly, one of whom
10 shall be appointed by the Majority Leader of the Senate, the
11 Minority Leader of the Senate, the Majority Leader of the
12 House of Representatives and the Minority Leader of the House
13 of Representatives.
14 (6) One public member appointed by the Governor.
15 (c) Compensation prohibited.--The members of the board shall
16 not be entitled to compensation for their services as members
17 but shall be entitled to reimbursement for all necessary
18 expenses incurred in connection with the performance of their
19 duties as members.
20 (d) Meetings.--The board shall provide for the holding of
21 regular and special meetings. A majority of the members of the
22 board shall constitute a quorum for the transaction of any
23 authority business. No vacancy on the board shall impair the
24 right of a quorum of the members of the board to exercise the
25 powers and perform the duties of the authority.
26 (e) Intergovernmental cooperation.--All applicable State
27 departments and agencies shall cooperate with and provide
28 assistance to the financing board without financial
29 reimbursement.
30 (f) Dissolution.--The authority may be dissolved by law
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1 provided that the authority has no debts or obligations
2 outstanding or that provision has been made for the payment or
3 retirement of all such debts and obligations. Upon the
4 dissolution of the authority, all property, funds and assets of
5 the authority shall be vested in the Commonwealth.
6 Section 4. General powers of the authority.
7 The authority, as a public corporation and governmental
8 instrumentality exercising public powers of the Commonwealth, is
9 hereby granted and shall have and may exercise all powers
10 necessary or appropriate to carry out and effectuate the
11 purposes of this act, including, but not limited to, the
12 following powers:
13 (1) To have existence until its existence shall be
14 terminated by law.
15 (2) To sue and be sued, implead and be impleaded,
16 complain and defend in all courts.
17 (3) To adopt, use and alter at will a corporate seal.
18 (4) To make bylaws for the management and regulations of
19 its internal affairs, and, subject to agreements with holders
20 of its bonds, to make rules and regulations with respect to
21 its operations, properties and facilities.
22 (5) To appoint such officers, agents and employees as it
23 may require for the performance of its duties, and to
24 prescribe their duties, fix their compensation, and to
25 promote and discharge them within the limitations provided by
26 law.
27 (6) To acquire and sell security interests at public or
28 private sale; to negotiate modifications or alterations to
29 security interests; to foreclose on security interest in
30 default or commence any action to protect or enforce any
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1 right conferred upon it by any law, security agreement,
2 contract or other agreement; to bid for and purchase property
3 which was the subject of such security interest at any
4 foreclosure or at any other sale; to acquire or take
5 possession of any such property; and to exercise any and all
6 rights as provided by law for the benefit or protection of
7 the authority or security interest holders.
8 (7) To make and execute contracts and to pay the
9 reasonable value of services rendered to the authority
10 pursuant to those contracts.
11 (8) To accept gifts, grants, loans and other aid from
12 the Federal Government, the Commonwealth or any political
13 subdivision of the Commonwealth, or any person or
14 corporation, foundation or legal entity, and to agree to and
15 comply with any conditions attached to Federal and
16 Commonwealth financial assistance not inconsistent with this
17 act.
18 (9) To invest moneys of the authority in such manner as
19 the board shall determine.
20 (10) To procure insurance against any loss in connection
21 with its programs, property and other assets.
22 (11) To engage the services of attorneys, accountants
23 and financial experts and any other advisors, consultants and
24 agents as may be necessary in its judgment and to fix their
25 compensation.
26 (12) To contract for the services of attorneys,
27 accountants and financial experts and any other advisors,
28 consultants and agents as may be necessary in its judgment,
29 subject to the requirement that the chairperson shall ensure
30 that women-owned or minority-owned or women-controlled or
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1 minority-controlled firms shall have an opportunity to
2 participate to a significant degree in the provision of any
3 contractual services purchased by the authority or any
4 investment made by or through the authority.
5 (13) To adopt rules and regulations containing such
6 restrictions as it may deem necessary or appropriate to
7 effectuate the public purposes of this act.
8 (14) To do any act necessary or convenient to the
9 exercise of the foregoing powers or powers reasonably implied
10 therefrom.
11 Section 5. Limitation.
12 The authority shall have no authority to incur debt or issue
13 bonds.
14 Section 6. Telecommunications Economic Development Fund.
15 (a) Fund established.--The Pennsylvania Telecommunications
16 Economic Development Fund is hereby established as a trust fund
17 in the State Treasury. All moneys generated by the fees imposed
18 under this act shall be deposited in the fund.
19 (b) Assessments.--Each local access provider shall make
20 contributions to the fund in two installments of 50¢ for each
21 access line, hookup or exchange identified on the following
22 schedule:
23 (1) local exchange telecommunications company providing
24 local telephone service access line in service as of January
25 1, 2000;
26 (2) local exchange telecommunications company providing
27 intrastate toll service access line in service as of January
28 1, 2000;
29 (3) local exchange telecommunications company providing
30 interstate toll service access line in service as of January
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1 1, 2000;
2 (4) community antenna television provider cable hookup
3 as of January 1, 2000; and
4 (5) cableless network provider per each local exchange
5 served as of January 1, 2000.
6 (c) Payments.--
7 (1) The first installment shall be made not later than
8 February 1, 2000.
9 (2) The second installment payment shall be made not
10 later than February 1, 2001.
11 (3) Payments shall be made to the authority.
12 (d) Character of funds.--The funds derived from this
13 assessment shall not be subject to the provisions of the act of
14 June 29, 1976 (P.L.469, No.117), entitled "An act relating to
15 the fiscal affairs of the Commonwealth concerning duties of the
16 Governor, the Secretary of Revenue and the Budget Secretary,
17 with respect to the submission of and signing the budget for any
18 fiscal year; and, after a budget is enacted, regulating the
19 issuance of warrants by the State Treasurer for certain
20 requisitioned funds and imposing duties on persons authorized by
21 law to issue requisitions for the payment of moneys from the
22 State Treasury; and prescribing that Federal funds received by
23 the Commonwealth shall be deposited in the General Fund account
24 with certain exceptions."
25 Section 7. Management of fund and accounts.
26 (a) Control and management of fund.--The members of the
27 board shall be the trustees of the fund. Regardless of any other
28 provision of law governing the investments of funds under the
29 control of an administrative board of the State government, the
30 trustees shall have exclusive control and management of the fund
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1 and full power to invest the same in accordance with the
2 provisions of this section and section 8, subject, however, to
3 the exercise of that degree of judgment, skill and care under
4 the circumstances then prevailing which persons of prudence,
5 discretion and intelligence, who are familiar with such matters,
6 exercise in the management of their own affairs not in regard to
7 speculation, but in regard to the permanent disposition of the
8 funds, considering the probable income to be derived therefrom
9 as well as the probable safety of their capital. The board shall
10 have the power to hold, purchase, sell, lend, assign, transfer
11 or dispose of any of the securities and investments in which any
12 of the moneys in the fund shall have been invested as well as of
13 the proceeds of said investments, including any directed
14 commissions which have accrued to the benefit of the fund as a
15 consequence of the investments, and of any moneys belonging to
16 said fund, subject in every case to meeting the standard of
17 prudence set forth in this subsection.
18 (b) Custodian of fund.--The State Treasurer shall be the
19 custodian of the fund.
20 (c) Payments from fund.--All payments from the fund shall be
21 made by the State Treasurer in accordance with requisitions
22 signed by the secretary of the board, or his designee, and
23 ratified by resolution of the board.
24 (d) Fiduciary status of board.--
25 (1) The members of the board, employees of the board and
26 agents thereof shall stand in a fiduciary relationship
27 regarding the investments and disbursements of any of the
28 moneys of the fund and shall not profit either directly or
29 indirectly with respect thereto. The board may, when possible
30 and consistent with its fiduciary duties imposed by this
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1 subsection, section 8, or other law, including its obligation
2 to invest and manage the fund, consider whether an investment
3 in any project or business enhances and promotes the general
4 welfare of this Commonwealth and its citizens, including, but
5 not limited to, investments that increase and enhance the
6 employment of Commonwealth residents and stimulate further
7 investment and economic activity in this Commonwealth.
8 (2) The board shall, through the Governor, submit to the
9 General Assembly annually a report identifying the nature and
10 amount of all existing investments made pursuant to this
11 subsection and section 8.
12 (e) Name for transacting business.--By the name of "The
13 Pennsylvania Telecommunications Economic Development Fund" all
14 of the business of the authority shall be transacted, its fund
15 invested, all requisitions for money drawn and payments made,
16 and all of its cash and securities and other property shall be
17 held, except that, any other law to the contrary
18 notwithstanding, the board may establish a nominee registration
19 procedure for the purpose of registering securities in order to
20 facilitate the purchase, sale or other disposition of securities
21 pursuant to this act.
22 (f) Considerations.--In determining whether an investment
23 meets the standard of prudence, the board may consider, together
24 with the expected return on and the risk characteristics of the
25 particular investment, the actual and expected future returns
26 and the risk characteristics of the total venture capital
27 investments held by the board at the time and the degree to
28 which the proposed new investment would promote further
29 diversification within the venture capital asset class.
30 (g) Vehicles for authorized investments.--The board in its
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1 prudent discretion may make any investments which meet the
2 standard of prudence set forth in subsection (a) by becoming a
3 limited partner in partnerships that will hold or make such
4 investments or by acquiring stocks or shares or units of
5 participation or otherwise participating beneficially in the
6 fund of any corporation or trust organized or created and
7 existing under the laws of the United States or of this
8 Commonwealth, provided that, in any such case, the liability of
9 the fund shall be limited to the amount of its investment.
10 (h) Legislative declaration concerning certain authorized
11 investments.--The General Assembly finds and declares that
12 authorized investments of the fund made by or on behalf of the
13 board under this section whereby the board becomes a joint owner
14 or stockholder in any company, corporation or association are
15 outside the scope of the original intent and therefore do not
16 violate the prohibition set forth in section 8 of Article VIII
17 of the Constitution of Pennsylvania.
18 Section 8. Limitations on investments.
19 Notwithstanding any other provision of this act to the
20 contrary, the board shall invest the moneys in the fund
21 exclusively to provide loans to or take an equity interest in
22 telecommunications-related business ventures located within this
23 Commonwealth. The board may make such investments directly or
24 through an approved financial manager. Such loans or equity
25 interests by the board shall be limited to first stage, second
26 stage and bridge financing venture capital investments.
27 Section 9. Effective date.
28 This act shall take effect in 60 days.
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