1Amending Titles 12 (Commerce and Trade) and 64 (Public 
2Authorities and Quasi-Public Corporations) of the 
3Pennsylvania Consolidated Statutes, in economic development 
4financing strategy, further providing for definitions; 
<-5establishing the Pennsylvania Military Community Enhancement 
6Commission; in small business first, further providing for 
7definitions, for fund and accounts, for department 
8responsibilities, for capital development loans, for EDA 
9loans, for loans in distressed communities, for pollution 
10prevention assistance loans, and for export financing loans; 
11providing for delegation; and further providing for reporting 
12and inspection; in machinery and equipment loans, further 
13providing for definitions, for establishment, for eligibility 
14for loans and terms and conditions, for application and 
15administration, for powers of secretary, for reporting and 
16inspection, for nondiscrimination, for conflict of interest, 
17for reports to General Assembly and for guidelines; providing 
18for the Pennsylvania Industrial Development Program; in 
19Pennsylvania Industrial Development Authority, providing for 
20general provisions, for Pennsylvania Industrial Development 
21Program and transfer of loans; repealing certain provisions 
22of the Pennsylvania Industrial Development Authority Act; and 
23making editorial changes.

1The General Assembly of the Commonwealth of Pennsylvania
2hereby enacts as follows:

<-3Section 1. The General Assembly finds and declares as
4follows:

5(1) The successful operation and enhancement of the active,
6reserve and the National Guard components of our nation's
7military are essential to the well-being and safety of our
8nation and to the citizens of this Commonwealth.

9(2) The United States military installations, organizations 
10and defense-related regions comprised of military bases and 
11supporting private sector enterprises located in this 
12Commonwealth are of vital importance to the efficient and 
13effective operation of the various branches of the military and 
14are a significant contributor to the Commonwealth's economy.

15(3) There is a need to have an integrated approach among
16Federal, State and local agencies, the general public and
17private businesses in the economic enhancement and preservation
18of the military installations and organizations.

19(4) The Commonwealth shall promote the health, safety,
20employment, business opportunities, economic activity and
21general welfare of our citizens by establishing, within the
22Department of Community and Economic Development, a commission
23to carry out these goals.

24Section <-1 <-1.1. Section 302 of Title 12 of the Pennsylvania
25Consolidated Statutes is amended to read:

26§ 302. Definitions.

27The following words and phrases when used in this chapter
28shall have the meanings given to them in this section unless the
29context clearly indicates otherwise:

30"Economic development program." A program which is

1administered by the department, including programs administered
2or staffed by the department, and which provides financial
3assistance for economic development to persons. The term
4includes all of the following:

5(1) Any program created under Part III (relating to
6economic development programs).

7(2) Any program of an entity created under [Part IV] 64 
8Pa.C.S. Pt. II (relating to economic development financing).

9(3) The Pennsylvania Industrial Development Authority.

10(4) The Pennsylvania Minority Business Development
11Authority.

12(5) The Infrastructure Development Program.

13(6) The Industrial Sites Reuse Program.

14(7) The tax credit programs established in Articles
15XVII-B and XVIII-B of the act of March 4, 1971 (P.L.6, No.2),
16known as the Tax Reform Code of 1971.

<-17Section 1.2. Title 12 is amended by adding a chapter to
18read:

19CHAPTER 4

20PENNSYLVANIA MILITARY COMMUNITY ENHANCEMENT COMMISSION

21Sec.

22401. Definitions.

23402. Establishment and membership.

24403. Powers and duties.

25404. Administrative assistance.

26405. Report.

27§ 401. Definitions.

28The following words and phrases when used in this chapter
29shall have the meanings given to them in this section unless the
30context clearly indicates otherwise:

1"Commission." The Pennsylvania Military Community
2Enhancement Commission established under this chapter.

3§ 402. Establishment and membership.

4(a) Establishment.--The commission is hereby established
5within the department.

6(b) Membership.--The commission shall be comprised of not
7more than 17 members as follows:

8(1) The Lieutenant Governor.

9(2) A member appointed by the President pro tempore of
10the Senate.

11(3) A member appointed by the Minority Leader of the
12Senate.

13(4) A member appointed by the Speaker of the House of
14Representatives.

15(5) A member appointed by the Minority Leader of the
16House of Representatives.

17(6) Up to 12 members appointed by the Governor as
18follows:

19(i) One member shall have experience at the senior
20level of the military, such as an active duty retired
21three-star or four-star military officer, and shall be
22familiar with the operations represented by the
23installations and organizations stationed in this
24Commonwealth. The member shall serve as chairperson in
25the absence of the chairperson elected by a majority of
26the members.

27(ii) At least ten members shall be representatives
28of the military installations or organizations stationed
29in this Commonwealth and shall have knowledge of the
30mission and operations of the installation or

1organization that they represent.

2(iii) One member shall be an expert in the field of
3economic development and shall be knowledgeable in the
4missions and operations of the military in their
5respective regions of this Commonwealth.

6(c) Chairperson.--A chairperson shall be elected by a
7majority of the commission members.

8(d) Executive director.--The Governor shall appoint an
9executive director who shall be an employee of the department.

10(e) Membership terms.--

11(1) Members shall be appointed for a term of two years
12and serve until their respective successors are appointed. A
13member may be reappointed for additional terms. Members
14appointed by the Governor shall serve at the pleasure of the
15Governor.

16(2) If a vacancy occurs on the commission, a successor
17shall be appointed in the same manner as the predecessor.

18(3) A member who is absent from two consecutive meetings
19of the commission without a reasonable excuse, as determined
20by the chairperson, shall forfeit membership on the
21commission.

22(4) Members shall not receive compensation for their
23services, but shall receive reimbursement for their necessary
24and proper expenses related to their duties on the
25commission.

26§ 403. Powers and duties.

27The commission shall have the following powers and duties:

28(1) Advise on the expansion of economic development
29opportunities and defense-related industry organizations in
30public or private sectors in this Commonwealth.

1(2) Establish a viable and long-term relationship with each
2military installation, organization and defense-related
3organization in this Commonwealth.

4(3) Closely monitor the activities at the Federal level
5relating to any initiative or proposal that will affect, either
6positively or negatively, any military installation or
7organization or defense-related organization in this
8Commonwealth.

9(4) Educate and engage stakeholders at the Federal, State
10and local levels and in the public and private sectors on the
11enhancement and preservation of the military installations and
12organizations and defense-related organizations in this
13Commonwealth.

14(5) Advocate at the Federal, State and local levels for the
15enhancement of the military installations and organizations and
16defense-related organizations in this Commonwealth in order to
17fully support our nation's military at home and abroad.

18(6) Identify, in coordination with the department, sources
19of funding for economic development projects, including projects
20under this title, 64 Pa.C.S. (relating to public authorities and
21quasi-public corporations) or projects under the act of February 
229, 1999 (P.L.1, No.1), known as the Capital Facilities Debt 
23Enabling Act, related to military installations and defense-
24related organizations and for the enhancement of military 
25installations or defense-related organizations in this 
26Commonwealth.

27(7) Estimate an annual budget for the commission.

28§ 404. Administrative assistance.

29The department shall provide appropriate administrative,
30legal and technical support as needed by the commission in order

1to accomplish its purpose.

2§ 405. Report.

3The commission shall report its activities no less than
4quarterly to the Governor or the Governor's designated
5representative and annually to the General Assembly.

6Section <-1.1 <-1.3. The definitions of "area loan 
7organization," "community development institution," "distressed 
8community," "EDA loan," "hospitality industry project" and 
9"pollution prevention assistance agency" in section 2302 of
10Title 12 are amended and the section is amended by adding
11definitions to read:

12§ 2302. Definitions.

13The following words and phrases when used in this chapter
14shall have the meanings given to them in this section unless the
15context clearly indicates otherwise:

16* * *

17["Area loan organization." A local development district, an
18industrial development agency organized and existing under the
19act of May 17, 1956 (1955 P.L.1609, No.537), known as the
20Pennsylvania Industrial Development Authority Act, or any other
21nonprofit economic development organization certified by the
22department as possessing the qualifications necessary to
23evaluate and administer loans made under this chapter.]

24"Authority." The Pennsylvania Industrial Development
25Authority organized and existing under the act of May 17, 1956
26(1955 P.L.1609, No.537), known as the Pennsylvania Industrial
27Development Authority Act.

28"Board."  The board of directors of the authority.

29* * *

30"Certified economic development organization." An entity

1certified by the authority under 64 Pa.C.S. § 1123 (relating to
2certification of economic development organizations).

3* * *

4["Community development institution." Any of the following:

5(1) An area loan organization for a distressed
6community.

7(2) A community development financial institution
8located in a distressed community and approved by the
9department.]

10"Distressed community." A community which has any of the
11following:

12(1) A census tract or other specifically defined
13geographic area in which there is any of the following:

14(i) A median income below 80% of the median income
15for the United States or this Commonwealth.

16(ii) Twenty percent or more of the population is
17below the poverty level by family size published by the
18Bureau of the Census.

19(iii) An unemployment rate 50% higher than the
20national average.

21(2) An area which is designated a subzone, expansion
22subzone or improvement subzone under the act of October 6, 
231998 (P.L.705, No.92), known as the Keystone Opportunity Zone
24and Keystone Opportunity Expansion Zone Act.

25(3) Any other geographic area designated by the
26[department] authority as distressed. The designation shall
27be published in the Pennsylvania Bulletin.

28"EDA loan." A loan made under this chapter utilizing funds
29made available to the department or the authority under the
30Public Works and Economic Development Act of 1965 (Public Law

189-136, 42 U.S.C. § 3121 et seq.).

2* * *

3"Hospitality industry project." A for-profit project or
4venture which involves a small business that operates a hotel,
5motel or other lodging facility and that employs at least five
6full-time equivalent employees at the time an application is
7submitted to the [department] authority for financing. The term
8includes a for-profit project or venture which involves a small
9business that operates a restaurant or food service operation
10open to the public, that has been in continuous operation for at
11least five years and that employs at least five full-time
12equivalent employees at the time an application is submitted.

13* * *

14["Pollution prevention assistance agency." Any of the
15following:

16(1) An area loan organization.

17(2) An industrial resource center created pursuant to
18the act of June 22, 2001 (P.L.400, No.31), known as the
19Industrial Resources Center Partnership Act.]

20* * *

21Section 2. Sections 2303 and 2304(a)(1) and (6), (b)(1) and
22(5), (c) and (d) of Title 12 are amended to read:

23§ 2303. Establishment.

24There is established [within the department] a program to be
25known as the Small Business First Program. The program shall be
26administered by the [department] authority and provide loans to
27eligible persons for certain projects which encourage job-
28creating and job-preserving economic development within this
29Commonwealth.

30§ 2304. Fund and accounts.

1(a) Fund.--The Small Business First Fund, created under
2section 1302(a) of the act of June 29, 1996 (P.L.434, No.67),
3known as the Job Enhancement Act, is continued. The Treasury
4Department shall credit the following to the fund:

5(1) Appropriations made by the General Assembly to the
6department or authority for the program.

7* * *

8(6) Any other deposits, payments or contributions from
9any other source made available to the department or 
10authority for the program.

11(b) Pollution prevention assistance.--The Pollution
12Prevention Assistance Account, created under the act of June 29, 
131996 (P.L.434, No.67), known as the Job Enhancement Act, is
14continued. The Treasury Department shall credit the following to
15this account:

16(1) Appropriations made by the General Assembly to the
17department or authority for pollution prevention assistance.

18* * *

19(5) Any other deposits, payments or contributions from
20any other source made available to the department or 
21authority for pollution prevention assistance.

22(c) Use of fund.--

23(1) Money in the fund may be used as follows:

24(i) By the [department] authority to make loans in
25accordance with this chapter and for administrative costs
26of the [department] authority in administering the
27program.

28(ii) By [area loan] certified economic development
29organizations for administrative costs associated with
30the program which are approved by the [department]

1authority.

2(2) Money from the fund derived from appropriations
3specified for export financing assistance may be deposited by
4the [department] authority in banks or trust companies in
5special accounts. The special accounts must be continuously
6secured by a pledge of direct obligations of the United
7States or of the Commonwealth having an aggregate market
8value, exclusive of accrued interest, at least equal to the
9balance on deposit in the account. The securities shall be
10deposited with the [department] authority to be held by a
11trustee or agent satisfactory to the [department] authority.
12Banks and trust companies are authorized to give security
13under this paragraph. Money in these special accounts shall
14be paid out on order of the [department] authority.

15(d) Use of Pollution Prevention Assistance Account.--Money
16in the Pollution Prevention Assistance Account may be used by
17the [department] authority to provide loans to small businesses
18for the adoption or installation of pollution-prevention or
19energy-efficient equipment or processes in accordance with
20section 2309 (relating to pollution prevention assistance
21loans).

22Section 3. Section 2305 heading, (a) introductory paragraph,
23(4) and (5), (b) introductory paragraph, (1) and (3)
24introductory paragraph of Title 12 are amended, subsection (a)
25is amended by adding a paragraph and the section is amended by
26adding a subsection to read:

27§ 2305. [Department] Authority responsibilities.

28(a) General rule.--The [department] authority shall do all
29of the following:

30* * *

1(4) Approve standards for [area loan] certified economic 
2development organization application fees.

3[(5) Approve community development financial
4institutions.]

5(6) Except as provided under section 2306(c)(iii)
6(relating to capital development loans), determine the job
7retention or job creation requirements for each project
8financed in whole or in part through a loan or line of credit
9made under this chapter.

10(b) Program.--In administering the program, the [department]
11authority may do any of the following:

12(1) Provide grants or other financial assistance to
13[area loan] certified economic development organizations for
14any of the following purposes:

15(i) To establish loan reserve funds.

16(ii) To reimburse loan losses to commercial banks
17and other financial institutions as a means of
18encouraging the expansion and financing of small
19businesses.

20* * *

21(3) Utilize the outstanding portfolio of loans and lines 
22of credit made under this chapter to raise additional funds
23by selling, securing, hypothecating or otherwise using such
24loan proceeds as a financing vehicle if the funds raised are
25used by the [department] authority for either of the
26following purposes:

27* * *

28(c) Additional powers.--In addition to the powers authorized
29under this chapter and 64 Pa.C.S. Ch. 11 (relating to
30Pennsylvania Industrial Development Authority), the board may

1administer the program by exercising the powers granted to it
2under the act of May 17, 1956 (1955 P.L.1609, No.537), known as
3the Pennsylvania Industrial Development Authority Act.

4Section 4. Sections 2306(a), (b)(1)(viii) and (2), (c), (d),
5(e)(1) and (2)(iii), (f) introductory paragraph and (9), (g)(1)
6and (2) and (h), 2307, 2308(a), (b)(1)(i), (iii) and (v) and
7(2), (c) heading (1) introductory paragraph, (2) and (3), (d),
8(e)(1) and (2), (f), (g)(1) and (2) and (h), 2309(a), (b), (c)
9(1) introductory paragraph and (i), (2) introductory paragraph
10and (3), (d), (e)(1), (f), (g)(1) and (2) and (h) and 2310(a),
11(b) introductory paragraph and (7), (c) introductory paragraph,
12(d), (e), (f)(1) and (2) and (g) of Title 12 are amended to
13read:

14§ 2306. Capital development loans.

15(a) Application.--A small business may submit an application
16and any applicable application fee to [its area loan] a 
17certified economic development organization requesting a loan or 
18line of credit for certain costs of a capital development
19project under 64 Pa.C.S. § 1121 (relating to common application 
20process). The application shall be on the form required by the
21[department] authority and shall include or demonstrate all of
22the following, in addition to the contents required under 64 
23Pa.C.S. § 1121(b):

24(1) The name and address of the applicant.

25(2) A statement of the type and amount of [loan]
26assistance sought.

27(3) A statement of the capital development project,
28including a detailed statement of the cost of the project.

29(4) A financial commitment from a responsible source for
30any cost of the capital development project in excess of the

1amount requested.

2(5) Any other information required by the [department]
3authority.

4(b) [Area loan] Certified economic development organization
5review.--

6(1) Upon receipt of a completed application, [an area
7loan] a certified economic development organization shall
8investigate and determine all of the following:

9* * *

10(viii) If the applicant complied with all other
11criteria established by the [department] authority.

12(2) Upon being satisfied that all requirements have been
13met, the [area loan] certified economic development
14organizations shall recommend the applicant to the
15[department] authority and forward the application with all
16supporting documentation to the [department] authority for
17its review and approval.

18(c) [Department] Authority review.--

19(1) Within 30 days of receiving a recommendation and a
20completed application, the [department] authority shall
21review the application. If the [department] authority is
22satisfied that all requirements have been met, the
23[department] authority may approve the loan request in
24accordance with the following:

25(i) A loan for land, buildings and machinery and
26equipment may not exceed [$200,000] $400,000 or 50% of
27the total capital development project costs, whichever is
28less. For the purposes of this subparagraph, capital
29development project costs incurred during the 12-month
30period prior to the date of submission of the application

1to the [department] authority shall be considered part of
2the total capital development project costs.

3(ii) A loan or line of credit for working capital
4may not exceed $100,000 [or 50% of the total capital
5development project costs, whichever is less].

6(iii) Except for loans to agricultural producers, a
7loan must create or preserve one job for every $25,000
8loaned. The authority may, by submitting notice to the 
9Legislative Reference Bureau for publication in the 
10Pennsylvania Bulletin, periodically update the amount 
11under this subparagraph, based on changes in unemployment 
12statistics, inflation, the authority's cash flow and the 
13need to keep this Commonwealth and the businesses of this 
14Commonwealth competitive.

15(2) The [department] authority shall notify the [area
16loan] certified economic development organization and
17applicant of its decision.

18(d) Approvals.--For applications which are approved, the
19[department] authority shall draw an advance equal to the
20principal amount of the loan from the fund. The advance shall be
21forwarded to the [area loan] certified economic development
22organization and, upon receipt by the [area loan] certified 
23economic development organization, shall become an obligation of
24the [area loan] certified economic development organization.
25Prior to providing loan funds to the applicant, the [area loan]
26certified economic development organization shall require the
27applicant to execute a note and to enter into a loan agreement.
28In addition to the requirements of subsection (e), the loan
29agreement shall include a provision requiring the recipient to
30use the loan proceeds to pay the costs of the capital

1development project. The [department] authority may require the
2[area loan] certified economic development organization to
3impose other terms and conditions on the recipient if the
4[department] authority determines that they are in the best
5interests of this Commonwealth, including a provision requiring
6collateral for any penalty imposed under subsection (g).

7(e) Loan terms.--A loan agreement entered into in accordance
8with subsection (c) shall do all of the following:

9(1) State the collateral securing the loan. All loans
10shall be secured by lien positions on collateral at the
11highest level of priority as may be determined by the [area
12loan] certified economic development organization with the
13approval of the [department] authority.

14(2) State the repayment period in accordance with the
15following:

16* * *

17(iii) A loan or line of credit for working capital
18shall have a repayment period of up to three years. A 
19line of credit may be renewed for an additional three-
20year period at the discretion of the authority.

21* * *

22(f) Loan administration.--A loan made under this section
23shall be administered in accordance with [departmental]
24authority policies and procedures by the [area loan] certified 
25economic development organization which made the loan. Each
26[area loan] certified economic development organization shall
27submit an annual report on the form required by the [department]
28authority and which includes or demonstrates all of the
29following:

30* * *

1(9) Any other information or documentation required by
2the [department] authority.

3(g) Penalty.--

4(1) Except as provided in paragraph (2), the
5[department] authority shall impose a penalty upon a
6recipient if the recipient fails to create or preserve the
7number of employment opportunities specified in its approved
8application.

9(2) The [department] authority may waive the penalty
10required by paragraph (1) if the [department] authority
11determines that the failure was due to circumstances outside
12the control of the recipient.

13* * *

14(h) Defaults.--The [department] authority may by foreclosure
15take title to a capital development project which it financed if
16acquisition is necessary to protect a loan made under this
17section. The [department] authority shall pay all costs arising
18out of the foreclosure and acquisition from moneys held in the
19fund. The [department] authority may, in order to minimize
20financial losses and sustain employment, lease the capital
21development project. The [department] authority may withdraw
22moneys from the fund to purchase first mortgages and to make
23payments on first mortgages on any capital development project
24which it financed where purchase or payment is necessary to
25protect a loan made under this section. The [department]
26authority may sell, transfer, convey and assign the first
27mortgages and shall deposit any moneys derived from the sale of
28any first mortgages in the fund.

29§ 2307. EDA loans.

30(a) Application and administration procedures.--The

1[department] authority shall establish application and
2administration procedures to be used for EDA loans. The
3procedures shall be established by guidelines and shall conform
4in all respects to those procedures required or established by
5the Economic Development Administration for use of Federal funds
6under the Public Works and Economic Development Act of 1965
7(Public Law 89-136, 42 U.S.C. § 3121 et seq.) and, if 
8applicable, 64 Pa.C.S. § 1121 (relating to common application 
9process).

10(b) Eligibility for EDA loans.--The [department] authority
11shall establish eligibility requirements to be used for EDA
12loans. The requirements shall be established by guidelines and
13shall conform in all respects to those procedures required or
14established by the Economic Development Administration for use
15of Federal funds under the Public Works and Economic Development
16Act of 1965.

17§ 2308. Loans in distressed communities.

18(a) Application.--A small business located in a distressed
19community may submit an application and any applicable
20application fee to a [community development institution]
21certified economic development organization requesting a loan or 
22line of credit for certain costs of a capital development
23project under 64 Pa.C.S. § 1121(a) (relating to common 
24application process). The application shall be on the form
25required by the [department] authority and shall include or
26demonstrate all of the following, in addition to the contents 
27required under 64 Pa.C.S. § 1121(b):

28(1) The name and address of the applicant.

29(2) A statement that the small business is engaged in
30business-to-public service or in the mercantile, commercial

1or point-of-sale retail business sectors.

2(3) A statement of the type and amount of [loan]
3assistance sought.

4(4) A statement of the capital development project,
5including a detailed statement of the cost of the project.

6(5) A financial commitment from a responsible source for
7the cost of the capital development project in excess of the
8amount requested.

9(6) Any other information required by the [department]
10authority.

11(b) [Community development institution] Certified economic 
12development organization review.--

13(1) Upon receipt of a completed application, a
14[community development institution] certified economic 
15development organization shall investigate and determine all
16of the following:

17(i) If the applicant is a small business which is
18engaged in business-to-public service or in the
19mercantile, commercial or point-of-sale retail business
20sectors in accordance with conditions or criteria
21established by the [department] authority.

22* * *

23(iii) If the applicant has demonstrated a direct
24impact on the community in which the capital development
25project is or will be located, on residents of that
26community or on the local and/or regional economy. The
27[department] authority shall establish criteria that will
28assist in making this demonstration.

29* * *

30(v) If the applicant complied with all other

1criteria established by the [department] authority.

2(2) Upon being satisfied that all requirements have been
3met, the [community development institution] certified 
4economic development organization shall recommend the
5applicant to the [department] authority and forward the
6application with all supporting documentation to the
7[department] authority for its review and approval.

8(c) [Department] Authority review.--

9(1) Upon receipt of a recommendation and a completed
10application, the [department] authority shall investigate and
11determine all of the following:

12* * *

13(2) If the [department] authority is satisfied that all
14requirements have been met, the [department] authority may
15approve the loan or line of credit request in an amount not
16to exceed $200,000 or 50% of the total capital development
17project costs, whichever is less. For the purpose of this
18paragraph, capital development project costs, except the
19costs related to working capital, incurred during the 12-
20month period prior to the date of submission of the
21application to the [department] authority shall be considered
22part of the total capital development project costs.

23(3) The [department] authority shall notify the
24[community development institution] certified economic 
25development organization and applicant of its decision.

26(d) Approvals.--For applications which are approved, the
27[department] authority shall draw an advance equal to the
28principal amount of the loan from the fund and, prior to
29providing loan funds to the applicant, the [department]
30authority shall require the applicant to execute a note and to

1enter into a loan agreement. In addition to the requirements of
2subsection (e), the loan agreement shall include a provision
3requiring the recipient to use the loan proceeds to pay the
4costs of the capital development project. The [department]
5authority may impose other terms and conditions on the recipient
6if the [department] authority determines they are in the best
7interests of this Commonwealth, including a provision requiring
8collateral for any penalty imposed under subsection (g).

9(e) Loan terms.--A loan agreement entered into in accordance
10with subsection (d) shall do all of the following:

11(1) State any collateral securing the loan. The
12[department] authority may use its best judgment to identify
13and secure collateral.

14(2) State the repayment period which may be flexible[.], 
15except that a line of credit may not have a term of more than 
16three years. A line of credit may be renewed for an 
17additional three-year period at the discretion of the 
18authority.

19* * *

20(f) Loan administration.--A loan made under this section
21shall be administered in accordance with [departmental]
22authority policies and procedures.

23(g) Penalty.--

24(1) Except as provided in paragraph (2), the
25[department] authority shall impose a penalty upon a
26recipient if the recipient fails to preserve the number of
27employment opportunities specified in its approved
28application.

29(2) The [department] authority may waive the penalty
30required by paragraph (1) if the [department] authority

1determines that the failure was due to circumstances outside
2the control of the recipient.

3* * *

4(h) Defaults.--The [department] authority may take title by
5foreclosure to a capital development project which it financed
6where acquisition is necessary to protect a loan made under this
7section. The [department] authority shall pay all costs arising
8out of the foreclosure and acquisition from money held in the
9fund. The [department] authority may, in order to minimize
10financial losses and sustain employment, lease the capital
11development project. The [department] authority may withdraw
12money from the fund to purchase first mortgages and to make
13payments on first mortgages on any capital development project
14which it financed if purchase or payment is necessary to protect
15a loan made under this section. The [department] authority may
16sell, transfer, convey and assign the first mortgages and shall
17deposit in the fund money derived from the sale of any first
18mortgages.

19§ 2309. Pollution prevention assistance loans.

20(a) Application.--A small business may submit an application
21and any application fee to a [pollution prevention assistance
22agency] certified economic development organization requesting a
23loan for a pollution prevention infrastructure under 64 Pa.C.S. 
24§ 1121(a) (relating to common application process). The
25application shall be on the form required by the [department]
26authority and shall include or demonstrate all of the following, 
27in addition to the contents required under 64 Pa.C.S. § 1121(b):

28(1) The name and address of the applicant.

29(2) A statement of the amount of loan assistance sought.

30(3) A statement of the pollution prevention

1infrastructure, including a detailed statement of the cost of
2the infrastructure.

3(4) A financial commitment from a responsible source for
4the cost of the pollution prevention infrastructure in excess
5of the amount requested.

6(5) Any other information required by the [department]
7authority.

8(b) [Pollution prevention assistance agency] Certified 
9economic development organization review.--

10(1) Upon receipt of a completed application, a
11[pollution prevention assistance agency] certified economic 
12development organization shall investigate and determine all
13of the following:

14(i) If the applicant is a small business.

15(ii) If the project is for pollution prevention
16infrastructure.

17(iii) If the applicant complied with all other
18criteria established by the [department] authority.

19(2) Upon being satisfied that all requirements have been
20met, the [pollution prevention assistance agency] certified 
21economic development organization shall recommend the
22applicant to the department and forward the application with
23all supporting documentation to the [department] authority
24for its review and approval.

25(c) [Department] Authority review.--

26(1) Upon receipt of a recommendation and a completed
27application, the [department] authority shall investigate and
28determine all of the following:

29(i) If the pollution prevention infrastructure
30demonstrates a substantial likelihood of preventing or

1reducing pollution. The Department of Environmental
2Protection shall assist the [department] authority in
3reviewing the applications and provide technical
4assistance.

5* * *

6(2) If the [department] authority is satisfied that all
7requirements have been met, the [department] authority may
8approve the loan request. A loan approved under this
9subsection may not exceed the lesser of:

10* * *

11(3) The [department] authority shall notify the
12[pollution prevention assistance agency] certified economic 
13development organization and applicant of its decision.

14(d) Approvals.--For applications which are approved, the
15[department] authority shall draw an advance equal to the
16principal amount of the loan from the Pollution Prevention
17Assistance Account. Prior to providing loan funds to the
18applicant, the [department] authority shall require the
19applicant to execute a note and to enter into a loan agreement.
20In addition to the requirements of subsection (e), the loan
21agreement shall include a provision requiring the recipient to
22use the loan proceeds to pay the costs of the pollution
23prevention infrastructure. The [department] authority may impose
24other terms and conditions on the recipient if the [department]
25authority determines they are in the best interests of this
26Commonwealth, including a provision requiring collateral for any
27penalty imposed under subsection (g).

28(e) Loan terms.--A loan agreement entered into in accordance
29with subsection (d) shall do all of the following:

30(1) State the collateral securing the loan. All loans

1shall be secured by lien positions on collateral at the
2highest level of priority as may be determined by the
3[department] authority.

4* * *

5(f) Loan administration.--A loan made under this section
6shall be administered in accordance with [departmental]
7authority policies and procedures.

8(g) Penalty.--

9(1) Except as provided in paragraph (2), the
10[department] authority shall impose a penalty upon a
11recipient if the recipient fails to carry out the pollution
12prevention infrastructure project as specified in its
13approved application.

14(2) The [department] authority may waive the penalty
15required by paragraph (1) if the [department] authority
16determines that the failure was due to circumstances outside
17the control of the recipient.

18* * *

19(h) Defaults.--The [department] authority may take title by
20foreclosure to a pollution prevention infrastructure which it
21financed if acquisition is necessary to protect a loan made
22under this section. The [department] authority shall pay all
23costs arising out of the foreclosure and acquisition from money
24held in the Pollution Prevention Assistance Account. The
25[department] authority may, in order to minimize financial
26losses and sustain employment, lease the pollution prevention
27infrastructure. The [department] authority may withdraw money
28from the Pollution Prevention Assistance Account to purchase
29first mortgages and to make payments on first mortgages on any
30pollution prevention infrastructure which it financed if the

1purchase or payment is necessary to protect a loan made under
2this section. The [department] authority may sell, transfer,
3convey and assign the first mortgages and shall deposit any
4money derived from the sale of any first mortgages in the
5Pollution Prevention Assistance Account.

6§ 2310. Export financing loans.

7(a) Application.--A person may submit an application and any
8applicable application fee to [the department or its area loan]
9a certified economic development organization requesting a loan
10for certain costs of a capital development project which will be
11used in export activities under 64 Pa.C.S. § 1121(a) (relating 
12to common application process). The application must be on the
13form required by the [department] authority and must include or
14demonstrate all of the following, in addition to the contents 
15required under 64 Pa.C.S. § 1121(b):

16(1) The name and address of the applicant.

17(2) A statement of the amount of loan assistance sought.

18(3) A statement of the capital development project,
19including a detailed statement of the cost of the project.

20(4) A financial commitment from a responsible source for
21any cost of the capital development project in excess of the
22amount requested.

23(5) A statement that the loan, if approved, would not
24supplant funding from private sector sources on commercially
25reasonable terms.

26(6) Any other information required by the [department] 
27authority.

28(b) Review.--Upon receipt of a completed application, the
29[department] authority shall investigate and determine all of
30the following:

1* * *

2(7) If the applicant complied with all other criteria
3established by the [department] authority.

4(c) Approvals.--If the [department] authority is satisfied
5that all requirements have been met, the [department] authority
6may approve the loan request. A loan approved under this section
7may not exceed $350,000. The [department] authority shall notify
8the applicant and, if applicable, the [area loan] certified 
9economic development organization of its decision. The
10[department] authority shall reserve an amount equal to the
11principal amount of the loan within the fund or the special
12account authorized by section 2304(c)(2) (relating to fund and
13accounts). Prior to providing funds to the applicant, the
14[department] authority shall require the applicant to execute a
15note and enter into a loan agreement. In addition to the
16requirements of subsection (d), the loan agreement shall include
17a provision requiring the recipient to use the loan proceeds to
18pay the costs of the capital development project. The
19[department] authority may impose other terms and conditions on
20the recipient if the [department] authority determines they are
21in the best interests of this Commonwealth, including any of the
22following:

23* * *

24(d) Loan terms.--A loan agreement entered into in accordance
25with subsection (c) shall do all of the following:

26(1) State the collateral securing the loan. All loans
27shall be secured by lien positions on collateral at the
28highest level of priority as may be determined by the
29[department] authority.

30(2) State the repayment period as determined by the

1[department] authority.

2(3) State the interest rate as determined by the
3[department] authority.

4(e) Loan administration.--A loan made under this section
5shall be administered in accordance with [departmental] 
6authority policies and procedures.

7(f) Penalty.--

8(1) Except as provided in paragraph (2), the
9[department] authority shall impose a penalty upon a
10recipient if the recipient fails to carry out the export
11activities specified in its approved application.

12(2) The [department] authority may waive the penalty
13required by paragraph (1) if the [department] authority
14determines that the failure was due to circumstances outside
15the control of the recipient.

16* * *

17(g) Defaults.--The [department] authority may, by
18foreclosure, take title to a capital development project which
19it financed if acquisition is necessary to protect a loan made
20under this section. The [department] authority shall pay all
21costs arising out of the foreclosure and acquisition from money
22held in the fund or a special account authorized by section
232304(c)(2). The [department] authority may, in order to minimize
24financial losses and sustain employment, lease the capital
25development project. The [department] authority may withdraw
26money from the fund or a special account authorized by section
272304(c)(2) to purchase first mortgages and to make payments on
28first mortgages on any capital development project which it
29financed if purchase or payment is necessary to protect a loan
30made under this section. The [department] authority may sell,

1transfer, convey and assign the first mortgages and shall
2deposit any money derived from the sale of any first mortgages
3in the fund or a special account authorized by section 2304(c)
4(2).

5Section 5. Title 12 is amended by adding a section to read:

6§ 2310.1. Delegation.

7For loans authorized under section 2306 (relating to capital
8development loans), 2307 (relating to EDA loans), 2308 (relating
9to loans in distressed communities), 2309 (relating to pollution
10prevention assistance loans) or 2310 (relating to export
11financing loans), the board may delegate the review and approval
12of applications totaling less than $200,000 to the authorized
13staff of the authority by adopting a resolution authorizing the
14delegation, subject to any conditions established by the board.
15The resolution must do all of the following:

16(1) Enumerate the qualifications and training required
17for authority staff to be authorized to review and approve
18applications.

19(2) Set loan guidelines and underwriting standards for
20the authorized staff to follow during the review and approval
21of applications.

22(3) Require authorized staff to provide a monthly report
23to the board of all actions to a pending or approved
24application taken during the reporting period.

25Section 6. Section 2311 of Title 12 is amended to read:

26§ 2311. Reporting and inspection.

27(a) Inspection.--An applicant or a recipient shall, upon
28request, permit authorized employees of the [department]
29authority or its agent to inspect the plant, books and records
30of the applicant or recipient.

1(b) Updating.--An applicant or a recipient shall provide
2updated information to the [department] authority and its agents
3if conditions change or to the extent that the information
4originally given becomes inaccurate or misleading.

5(c) Periodic reports.--A recipient shall provide the
6[department] authority and its agents with such periodic
7financial reports as the [department] authority may require
8until the loan is repaid in full.

9(d) Financial and performance audits.--An agent of the
10[department] authority shall annually submit to the [department]
11authority, at the agent's expense, an independent financial
12audit. If the audit reveals misconduct of a material nature on
13the part of the agent, the [department] authority shall take
14appropriate action.

15Section 7. Section 2902 of Title 12 is amended by adding
16definitions to read:

17§ 2902. Definitions.

18The following words and phrases when used in this chapter
19shall have the meanings given to them in this section unless the
20context clearly indicates otherwise:

21"Authority." The Pennsylvania Industrial Development
22Authority organized and existing under the act of May 17, 1956 
23(1955 P.L.1609, No.537), known as the Pennsylvania Industrial 
24Development Authority Act.

25"Board." The board of directors of the authority.

26* * *

27"Program." The Machinery and Equipment Loan Program
28established under section 2903 (relating to establishment).

29Section 8. Sections 2903, 2905(a) introductory paragraph and
30(1)(iv) and (v) and (c), 2906(a), (b), (c) introductory

1paragraph and (14), (d), (e) and (f), 2907, 2908, 2909, 2910,
22911 and 2912 of Title 12 are amended to read:

3§ 2903. Establishment.

4There is established [within the department] a program to be
5known as the Machinery and Equipment Loan Program. The program
6shall be administered by the [department] authority and provide
7loans to business enterprises for machinery and equipment.

8§ 2905. Eligibility for loans; terms and conditions.

9(a) Loans; general rules.--The [secretary] authority may
10make advances from the fund, subject to the terms, conditions
11and restrictions provided under this chapter, for the purpose of
12making loans to business enterprises involved in industrial
13processes, mining, manufacturing, production agriculture,
14information technology, biotechnology, service as a medical
15facility or other industrial or technology sectors, as defined
16by the [department] authority, to acquire and install new
17machinery and equipment or upgrade existing machinery and
18equipment, including the acquisition, application and
19utilization of computer hardware and software.

20(1) All loans shall be subject to all of the following
21conditions:

22* * *

23(iv) Be limited to projects that demonstrate the
24creation or retention of one job for every $25,000
25received from the fund. This subparagraph does not apply
26to loans made to business enterprises involved in
27production agriculture or to loans made to medical
28facilities. The authority may, by submitting notice to 
29the Legislative Reference Bureau for publication in the 
30Pennsylvania Bulletin, periodically update the amount
 

1under this subparagraph, based on changes in unemployment 
2statistics, inflation, the authority's cash flow and the 
3need to keep this Commonwealth and the businesses of this 
4Commonwealth competitive.

5(v) Have an interest rate which shall be established
6by the [secretary] authority.

7* * *

8(c) Security.--All loans shall be secured by no less than a 
9second lien position on the equipment purchased and other 
10sufficient collateral as determined by the [secretary] 
11authority.

12§ 2906. Application and administration.

13(a) Procedures.--Application and administration procedures
14for fund loans shall be established by the [secretary] authority 
15under 64 Pa.C.S. § 1121 (relating to common application 
16process).

17(b) Receipt.--The [secretary] authority shall receive
18applications from eligible business enterprises for machinery
19and equipment loans. Applications shall be made to the
20[secretary] authority in the form and manner as the [department] 
21authority may require.

22(c) Investigation.--Upon receipt of the application, the
23[secretary] authority shall investigate and review the
24application and either approve or disapprove the loan
25application by proper action of the [department] authority. The
26decision of the [secretary] authority shall be based, in whole
27or in part, upon the following criteria:

28* * *

29(14) Such information and documentation as the
30[secretary] authority shall require.

1(d) Notification.--The [secretary] authority shall notify
2the applicant of final approval or disapproval of the loan
3application within a reasonable period of time following the
4receipt of the application. In the case of approval of a loan
5application, the [secretary] authority shall arrange to draw the
6loan amount from the fund and advance the sum to the recipient.
7The advance shall be made available in the form of a loan
8transaction, which loan shall be evidenced by a note executed by
9the recipient and secured in a manner as the [secretary] 
10authority shall require in conformity in all respects to the
11loan as approved by the [secretary] authority.

12(e) Policy requirements [and report].--All loans shall be
13administered and monitored by the [department] authority in
14accordance with the policies and procedures prescribed by the
15[secretary] authority. [On or before September 1 of each year,
16the secretary shall prepare a report that includes the
17following:

18(1) Each outstanding loan.

19(2) The date of approval.

20(3) The original principal balance.

21(4) The current principal balance.

22(5) The interest rate.

23(6) The purpose for which the loan was made.

24(7) An enumeration of any problems or issues which have
25arisen with regard to each loan.

26(8) A statement regarding the progress of the business
27enterprise in creating and retaining its requisite number of
28employment opportunities.

29(9) Such other information and documentation as the
30secretary shall require.]

1(f) Penalty for noncompliance.--In the event that a loan
2recipient [shall] does not comply with its approved application
3by failing to create or preserve the number of employment
4opportunities specified in its approved application, the
5[secretary] authority shall impose a penalty equal to an
6increase in the interest rate to 2% greater than the current
7prime interest rate for the remainder of the loan unless the
8penalty is waived by the [secretary] authority because the
9failure is due to circumstances outside the control of the loan
10recipient. The penalty shall be payable in installments that the
11[secretary] authority deems appropriate.

12§ 2907. Powers of [secretary] authority.

13The [secretary] authority shall have and may exercise all 
14powers and authority necessary to the proper administration and 
15implementation of this chapter and shall have the authority to 
16adopt policies, procedures and guidelines and promulgate rules 
17and regulations necessary to effectuate the provisions of this 
18chapter. In addition to any powers authorized under this chapter 
19and 64 Pa.C.S. Ch.11 (relating to Pennsylvania Industrial 
20Development Authority), the board may administer the program by 
21exercising the powers granted to it under the act of May 17, 
221956 (1955 P.L.1609, No.537), known as the Pennsylvania 
23Industrial Development Authority Act.

24§ 2908. Reporting and inspection.

25(a) Inspection.--Each business enterprise which applies for
26or receives assistance under this chapter, upon reasonable
27request of the [department] authority, shall permit duly
28authorized employees of the department or the authority to
29inspect the plant, books and records of the business enterprise.

30(b) Updating.--Each business enterprise shall update the

1information given to the [department] authority in its
2application if conditions change or to the extent that the
3information given originally becomes inaccurate or misleading.

4(c) Periodic reports.--Each recipient of assistance under
5this chapter shall provide the [department] authority with
6periodic financial reports as the [secretary] authority may
7require until such time as the loan is paid off.

8[§ 2909. Nondiscrimination.

9No loan shall be made to a business enterprise unless the
10business enterprise certifies to the department, in a form
11satisfactory to the department, that it shall not discriminate
12against any employee or any applicant for employment because of
13race, religion, color, national origin, sex or age. The business
14enterprise shall also certify to the department that it is not
15currently under citation for pollution violations and that in
16the future it will meet all applicable antipollution standards.

17§ 2910. Conflict of interest.

18No employee of the department shall, either directly or
19indirectly, be a party to or have any financial interest in any
20contract or agreement arising pursuant to this chapter.]

21§ 2911. Reports to General Assembly.

22(a) Annual reports.--On or before September 1 of each year,
23the [secretary] authority shall provide a report to the
24Secretary of the Senate and to the Chief Clerk of the House of
25Representatives. The report shall describe all relevant
26activities of the [department] authority pursuant to this
27chapter and shall include the following:

28(1) List of business enterprises receiving loans from
29the fund and the amounts and terms of this assistance.

30(2) Loan amounts repaid. Information under this

1paragraph may be reported in the aggregate.

2(3) Loans outstanding, balances due and any penalties
3imposed. Information under this paragraph may be reported in
4the aggregate.

5(4) Jobs created by businesses receiving funds in
6previous years. Information under this paragraph may be
7reported in the aggregate.

8(5) Other relevant information as determined by the
9[secretary] authority.

10(b) Availability of departmental reports.--Reports prepared
11by the secretary under section 2906(e) (relating to application
12and administration) shall be made available upon request to
13members of the General Assembly.

14§ 2912. Guidelines.

15The [department] authority shall develop written guidelines
16for the implementation of this chapter.

17Section 8.1. Title 12 is amended by adding a chapter to
18read:

19CHAPTER 30

20PENNSYLVANIA INDUSTRIAL DEVELOPMENT PROGRAM

21Sec.

223001. Scope of chapter.

233002. Definitions.

243003. Establishment.

253004. Industrial Development Fund.

263005. Application.

273006. Loans for industrial development projects.

283007. Loans for industrial parks.

293008. Loans for multiple-tenancy building projects.

303009. Reporting and inspection.

13010. Limitations.

23011. Job creation.

3§ 3001. Scope of chapter.

4This chapter relates to the Pennsylvania Industrial
5Development Program.

6§ 3002. Definitions.

7The following words and phrases when used in this chapter
8shall have the meanings given to them in this section unless the
9context clearly indicates otherwise:

10"Agricultural processor." An entity that adds value by
11subjecting one or more farm commodities to a process of
12manufacture, development or preparation for sale or a person
13that converts a farm product into a marketable form.

14"Agricultural producer." A person or entity involved in the
15management and use of an agricultural operation for the
16production of a farm commodity.

17"Agriculture." Any of the following:

18(1) The management and use of an agricultural operation
19for the production of a farm commodity.

20(2) The sale of a farm commodity at wholesale.

21(3) The sale of a farm commodity at retail by an urban
22and rural supermarket in an underserved area or farmers'
23markets.

24(4) An energy-related activity impacting production
25agriculture.

26(5) An activity which implements best industry practices
27related to an agricultural waste product, agriculture by-
28product or fertilizer.

29"Authority." The Pennsylvania Industrial Development
30Authority organized and existing under the act of May 17, 1956
 

1(1955 P.L.1609, No.537), known as the Pennsylvania Industrial 
2Development Authority Act.

3"Board." The board of directors of the authority.

4"Fund." The Industrial Development Fund.

5"Industrial development project." A project sponsored by a
6certified economic development organization involving the
7acquisition or improvement of real property within this
8Commonwealth which will be occupied and operated by any of the
9following:

10(1) An industrial enterprise.

11(2) A manufacturing enterprise.

12(3) A research and development enterprise.

13(4) An agricultural producer.

14(5) An agricultural processor.

15"Industrial enterprise." An enterprise which has created or
16will create substantial employment opportunities. The term may
17include a warehouse, distribution and terminal facility and
18office building utilized as national or regional headquarters or
19computer or clerical operations centers. The term shall not
20include a mercantile, commercial or retail enterprise.

21"Industrial park project." A project sponsored by a
22certified economic development organization for the purpose of
23creating sites for the establishment of two or more industrial
24development projects.

25"Manufacturing enterprise." An enterprise which is engaged
26in the giving of a new shape, new quality or new combination to
27matter by the application of skill and labor.

28"Multiple-tenancy building project." A project sponsored by
29a certified economic development organization involving the
30acquisition or construction of land, site, structure or facility

1for occupancy by two or more industrial enterprises,
2manufacturing enterprises, research and development enterprises,
3agricultural producers or agricultural processors.

4"Program." The Pennsylvania Industrial Development Program
5established under section 3003 (relating to establishment).

6"Research and development enterprise." An enterprise for the
7discovery of new and the refinement of known substances,
8processes, products, theories and ideas. The term does not
9include an enterprise activity directed primarily to the
10accumulation or analysis of commercial, financial or mercantile
11data.

12§ 3003. Establishment.

13There is established within the authority a program to be
14known as the Pennsylvania Industrial Development Program. The
15program shall be administered by the authority to provide loans
16for industrial development projects, industrial parks and
17multiple-tenancy building projects, to increase employment
18levels and to improve the overall economic health of this
19Commonwealth.

20§ 3004. Industrial Development Fund.

21(Reserved).

22§ 3005. Application.

23A certified economic development organization may submit an
24application for assistance under this chapter and under 64
25Pa.C.S. § 1121(a) (relating to common application process). The
26application shall be on the form required by the authority and
27shall include or demonstrate all of the following, in addition
28to the contents required under 64 Pa.C.S. § 1121(b):

29(1) A general description of the type, classes and
30number of employees employed or to be employed in the

1operation of the project.

2(2) The cost or estimate of the cost of establishing the
3project. As used in this paragraph, the term "cost" shall
4include financing charges, including interest incurred before
5and during construction, but shall not include the cost of
6any machinery, equipment or fixtures necessary for the
7project or the installation or maintenance of any of the
8machinery, equipment or fixtures.

9(3) Financial statements of the applicant, proposed
10guarantors and any other party whose credit is significant to
11the approval of the financial assistance. By guideline, the
12authority may specify the period to be covered by the
13financial statements and whether they must be compiled,
14reviewed or prepared by a certified public accountant.

15(4) Evidence of the arrangement made by the borrower for
16the financing of all costs of the project exceeding the
17amount to be financed by the authority.

18(5) Evidence that the establishment of the project will
19not cause the removal of an industrial enterprise,
20manufacturing enterprise, research and development
21enterprise, agricultural producer or agricultural processor
22from one area of this Commonwealth to another area of this
23Commonwealth, as determined by the authority.

24(6) Evidence that the proposed project location has
25undergone an environmental assessment.

26(7) Any other information required by the authority.

27§ 3006. Loans for industrial development projects.

28The authority may contract to loan an amount not to exceed
2950% of the cost of establishing an industrial development
30project, subject to the following conditions:

1(1) Before making the loan, the authority shall
2determine that:

3(i) the borrower is responsible to assume all
4obligations imposed by the authority in connection with
5the project, financial or otherwise, and to undertake the
6operation of the project; and

7(ii) the borrower has obtained from other
8independent and responsible sources a firm commitment for
9any funds which, in addition to the loan and any other
10property or assets held by the borrower, are necessary
11for the completion and operation of the project.

12(2) The authority shall determine the interest rate and
13repayment period of the loan.

14(3) The loan must be evidenced by note of the borrower,
15and secured by a mortgage on the project for which the loan
16was made, subordinate only to the mortgage securing the first
17lien obligation issued to secure the commitment of funds
18provided to pay the cost of the project from the independent
19and responsible sources, and used in the financing of the
20project.

21(4) The authority may require additional security as it
22may deem necessary.

23§ 3007. Loans for industrial parks.

24The authority may contract to loan an amount not to exceed
2575% of the cost of establishing an industrial park project,
26subject to the following conditions:

27(1) The authority shall determine the interest rate and
28repayment period of the loan.

29(2) The loan must be evidenced by note of the borrower
30and secured by a first mortgage on the industrial park or by

1participation in a first mortgage. If a Federal agency
2participates in the financing of the industrial park, the
3authority may take as security for its loan a mortgage on the
4industrial park which is second only to the mortgage given to
5the Federal agency.

6(3) If the loan is secured by participation in a first
7mortgage on the industrial park, a portion of the loan, not
8to exceed 10% of the cost of the project, may be secured by a
9second mortgage on the industrial park which is second only
10to the participating first mortgage.

11§ 3008. Loans for multiple-tenancy building projects.

12The authority may contract to loan an amount not to exceed
1350% of the cost of establishing a multiple-tenancy building
14project, subject to the following conditions:

15(1) The authority shall determine the interest rate and
16repayment period of the loan.

17(2) The loan must be evidenced by note of the borrower
18and secured by a first mortgage or participation in a first
19mortgage on the multiple-tenancy building project.

20(3) The authority may contract to loan an amount not to
21exceed 50% of the cost of the project if the loan is secured
22by a first mortgage or participation in a first mortgage on
23the project. If the loan is not secured by a first mortgage
24or participation in a first mortgage on the project, the
25authority may contract to loan an amount not to exceed 40% of
26the cost of the project.

27(4) If the loan is secured by a participation in a first
28mortgage on the project, the authority may permit a portion
29of its loan, not to exceed 10% of the cost of the project, to
30be secured by a second mortgage on the project which is

1second only to the participating first mortgage.

2§ 3009. Reporting and inspection.

3(a) Inspection.--An applicant or a recipient shall, upon
4request, permit authorized employees of the authority or its
5agent to inspect the plant, books and records of the applicant
6or recipient.

7(b) Updating.--An applicant or a recipient shall provide
8updated information to the authority and its agents if
9conditions change or to the extent that the information
10originally given becomes inaccurate or misleading.

11(c) Periodic reports.--A recipient shall provide the
12authority and its agents with periodic financial reports as the
13authority may require until the loan is repaid in full.

14(d) Financial and performance audits.--A recipient shall
15annually submit to the authority, at the recipient's expense, an
16independent financial audit. If the audit reveals misconduct of
17a material nature on the part of the recipient, the authority
18shall take appropriate action.

19§ 3010. Limitations.

20A loan may not be recommended or approved if the proceeds of
21the loan could do any of the following:

22(1) Cause, aid or assist directly in the relocation of
23any business operations from one part of this Commonwealth to
24another unless there is at least a 25% net increase in
25employment.

26(2) Refinance any portion of the total cost of an
27industrial development project, industrial park or multiple-
28tenancy building project or other existing loans or debt.

29(3) Finance an industrial development project,
30industrial park or multiple-tenancy building project located

1outside the geographic boundaries of this Commonwealth.

2(4) Provide funds, directly or indirectly, for payment
3distribution or as loan owners, partners or shareholders of a
4small business, except as ordinary compensation for services
5rendered.

6(5) Provide funds for speculation in real or personal
7property, whether tangible or intangible.

8§ 3011. Job creation.

9The authority shall establish minimum levels of job creation
10for loans under this chapter, or a requirement that one new job
11be created for a certain amount of funds loaned. In establishing
12the minimum levels of job creation, the authority shall consider
13unemployment statistics, inflation, the authority's cash flow
14and the need to keep this Commonwealth and the businesses of
15this Commonwealth competitive. Notice of job creation
16requirements must be submitted to the Legislative Reference
17Bureau for publication in the Pennsylvania Bulletin.

18Section 8.2. Title 12 is amended by adding a part heading
19immediately preceding Chapter 51 to read:

20PART IV

21COMMERCIAL PROTECTION

22Chapter

2351. Fraudulent Transfers

2453. Trade Secrets

25Section 8.3. The heading of Part IV of Title 12 is repealed:

26[PART IV

27ECONOMIC DEVELOPMENT AND FINANCING (Reserved)]

28Section 9. The heading of Chapter 11 of Title 64 is amended
29to read:

30CHAPTER 11

1PENNSYLVANIA INDUSTRIAL DEVELOPMENT AUTHORITY

2[(Reserved)]

3Section 9.1. Chapter 11 of Title 64 is amended by adding
4subchapters to read:

5SUBCHAPTER A

6GENERAL PROVISIONS

7Sec.

81101. Scope of chapter.

91102. Definitions.

10§ 1101. Scope of chapter.

11This chapter relates to the Pennsylvania Industrial
12Development Authority.

13§ 1102. Definitions.

14The following words and phrases when used in this chapter
15shall have the meanings given to them in this section unless the
16context clearly indicates otherwise:

17"Application." A request for financial assistance from the
18programs.

19"Authority." The Pennsylvania Industrial Development
20Authority organized and existing under the act of May 17, 1956 
21(1955 P.L.1609, No.537), known as the Pennsylvania Industrial 
22Development Authority Act.

23"Board." The board of directors of the authority.

24"Certified economic development organization." An entity
25certified by the authority under section 1123 (relating to
26certification of economic development organizations).

27"Department." The Department of Community and Economic
28Development of the Commonwealth.

29"Industrial Development Fund." The fund established under
30section 8 of the act of May 17, 1956 (1955 P.L.1609, No.537),
 

1known as the Pennsylvania Industrial Development Authority Act.

2"Machinery and Equipment Loan Fund." The fund established
3under 12 Pa.C.S. § 2904 (relating to Machinery and Equipment
4Loan Fund).

5"Machinery and Equipment Loan Program." The program
6authorized by 12 Pa.C.S. Ch. 29 (relating to machinery and
7equipment loans).

8"Pennsylvania Industrial Development Program." The program
9authorized under 12 Pa.C.S. Ch. 30 (relating to Pennsylvania
10Industrial Development Program).

11"Pollution Prevention Assistance Account." The account
12continued under 12 Pa.C.S. § 2304 (relating to fund and
13accounts).

14"Programs." Any of the following:

15(1) The Small Business First Program.

16(2) The Machinery and Equipment Loan Program.

17(3) The Pennsylvania Industrial Development Program.

18(4) All programs authorized by the act of May 17, 1956
19(1955 P.L.1609, No.537), known as the Pennsylvania Industrial
20Development Authority Act.

21"Small Business First Fund." The fund continued under 12
22Pa.C.S. § 2304 (relating to fund and accounts).

23"Small Business First Program." The program authorized by 12
24Pa.C.S. Ch. 23 (relating to small business first).

25SUBCHAPTER B

26STRUCTURES AND POWERS

27(Reserved)

28SUBCHAPTER C

29PROGRAM MANAGEMENT

30Sec.

11120. Program management.

21121. Common application process.

31122. Regulations.

41123. Certification of economic development organizations.

51124. Transfer of funds.

61125. Conflict of interest.

7§ 1120. Program management.

8The authority shall operate the programs in a coordinated and
9integrated manner, utilizing to the maximum extent possible the
10same criteria and standards in defining and administering the
11projects to be funded under the programs.

12§ 1121. Common application process.

13(a) Preparation.--An application for assistance under the
14programs must be prepared and approved by a certified economic
15development organization before it is submitted to the
16authority, and the application shall comply with any additional
17requirements of the programs.

18(b) Contents.--The application, which shall be in the form
19required by the authority, shall include the following
20information, where applicable:

21(1) The applicant's name.

22(2) The applicant's address.

23(3) A description of the type and amount of financial
24assistance requested.

25(4) A description of the applicant's business or, if the
26applicant is not the borrower, the borrower's business,
27including all of the following:

28(i) The type of business conducted.

29(ii) The location of the business.

30(iii) The date the business was established.

1(iv) The address of the business, including the
2address of all offices of the business located in this
3Commonwealth.

4(v) The name and address of each principal.

5(vi) The number of current employees and an estimate
6of future employees.

7(5) A description of the project, including all of the
8following:

9(i) The location of the project.

10(ii) The total estimated cost of the project, as
11calculated by an engineer or other qualified
12professional.

13(iii) An identification of all sources of capital
14for the project.

15(iv) A legal description of all real property held
16or to be acquired for the establishment of the project.

17(v) A general description and statement of value of
18any real or personal property of the applicant and, if
19applicable, the buyer or tenant of the project, to be
20applied to the establishment of the project.

21(6) A statement that the project is consistent with any
22existing comprehensive county plan where the project is
23located.

24(7) A firm commitment from the intended project user to
25use the project upon completion.

26(8) A brief description of the anticipated economic
27impact to this Commonwealth and the host municipality and
28county as a result of the project.

29(9) Any plans or other documents as may be required to
30show the type, structure and general character of the

1project.

2(10) A statement that the applicant certifies to the
3authority that it will not discriminate against any employee
4or any applicant for employment because of race, religion,
5color, national origin, sex or age.

6(11) A statement that the applicant certifies to the
7authority that it is not currently under citation for
8pollution violations and that in the future it will meet all
9applicable antipollution standards.

10(12) Any information required by the program under which
11financial assistance may be provided.

12(13) Any other information required by the authority.

13(c) Review and approval.--

14(1) In reviewing the application, the authority shall
15consider the following, where applicable:

16(i) Whether the value of the proposed collateral and
17the financial resources offered by the applicant are
18sufficient to repay the loan.

19(ii) Whether the project will enable future
20employment opportunities in or have a net positive
21economic impact on the surrounding community.

22(iii) Whether the statement of the estimated cost of
23the project is reasonable.

24(iv) Whether the sources of financial commitments
25for funds in excess of the amount requested under this
26subchapter are reliable.

27(v) Whether the applicant has complied with terms
28required by the programs and under this subchapter.

29(vi) Whether the applicant has a history of
30investment in Pennsylvania-related companies.

1(vii) Whether the applicant has demonstrated strong
2relationships with organizations in this Commonwealth
3which foster economic development.

4(viii) Whether the applicant has a strong
5performance record.

6(ix) Whether the applicant has demonstrated an
7ability to meet and satisfy debt service, if applicable,
8as it becomes due and payable.

9(x) Whether the applicant has any outstanding
10environmental violations.

11(xi) Any other information deemed to be relevant by
12the authority.

13(2) Subject to any applicable limitations under this
14subchapter, the amount, duration, interest rate, security
15required and any other terms of the loan shall be determined
16at the discretion of the authority based upon its
17determination of the potential financial risk to the
18Commonwealth.

19(3) Financial assistance may not be approved if the
20proceeds would be used to:

21(i) refinance any portion of the total cost of a
22capital development project, pollution prevention
23infrastructure or other existing loans or debt;

24(ii) finance a project located outside the
25geographic boundaries of this Commonwealth;

26(iii) relocate a business to another part of this
27Commonwealth, unless approved in advance by the authority
28which shall consider the negative economic impact on the
29community that the business is leaving; or

30(iv) provide funds, directly or indirectly, for

1payment distribution or as a loan to owners, partners or
2shareholders of a small business, except as ordinary
3compensation for services rendered.

4(4) (i) The terms of all agreements for financial
5assistance awarded under this subchapter shall include
6any material terms, requirements or other conditions
7provided for agreements entered into under this
8subchapter. The authority may impose other terms and
9conditions if it determines that they are in the best
10interests of the Commonwealth, including a provision
11requiring collateral for any penalty which may be
12imposed.

13(ii) Upon approving an application for a loan under
14the programs, the authority shall draw an advance equal
15to the principal amount of the loan from the appropriate
16account and, before disbursing loan funds to the
17applicant, require the applicant to execute a note and to
18enter into a loan agreement and any other agreement as
19the authority may require.

20(d) Review and notice.--Upon reviewing the application, the
21authority shall notify the applicant and the certified economic
22development organization of its decision or request additional
23information or certifications before making its decision.

24(e) Reporting and inspection.--An applicant or a recipient
25of financial assistance under the programs shall:

26(1) permit the authority to inspect its premises, books
27and records;

28(2) provide updated information to the authority if
29conditions change to the extent that the information
30originally given becomes inaccurate or misleading; and

1(3) provide the authority with any periodic financial
2reports and audits that the authority may require.

3(f) Employment projection audits.--The authority shall
4implement a procedure to determine whether the employment
5projections described in the application are achieved.

6(g) Transition.--The board shall have all power and
7authority necessary to implement a transition and continuation
8of consideration of pending applications and any other pending
9administrative actions under section 6 of the act of May 17, 
101956 (1955 P.L.1609, No.537), known as the Pennsylvania 
11Industrial Development Authority Act, that are submitted to the
12authority for consideration prior to the effective date of this
13section.

14§ 1122. Regulations.

15The board shall promulgate regulations necessary to
16administer the programs.

17§ 1123. Certification of economic development organizations.

18(a) General rule.--The authority shall establish guidelines
19for the certification of eligible nonprofit organizations as
20certified economic development organizations.

21(b) Eligible applicants.--The following nonprofit
22organizations may apply to be certified as a certified economic
23development organization:

24(1) A local development district organized and existing 
25under the act of act of December 7, 1994 (P.L.845, No.120), 
26known as the Local Development District Act.

27(2) An industrial development agency organized and 
28existing under the act of May 17, 1956 (1955 P.L.1609, 
29No.537), known as the Pennsylvania Industrial Development 
30Authority Act.

1(3) An industrial resource center organized and existing
2under the act of June 22, 2001 (P.L.400, No.31), known as the
3Industrial Resources Center Partnership Act.

4(4) A redevelopment authority organized and existing
5under the act of May 24, 1945 (P.L.982, No.383), known as the
6Redevelopment Cooperation Law.

7(5) A Community Development Financial Institution
8certified by the Community Development Financial Institution
9Fund established in section 104(a)(1) of the Riegle Community
10Development and Regulatory Improvement Act of 1994 (Public
11Law 103-325, 12 U.S.C. § 4703(a)(1)).

12(6) Any other nonprofit economic development
13organization determined by the authority as possessing the
14qualifications necessary to evaluate and administer the
15programs.

16(c) Requirements.--The guidelines must, at minimum, set
17requirements for annual training and professional development
18for an organization's professional staff, standards for the
19organization's facilities and technical capabilities, and
20require the organization to adopt a code of ethics.

21(d) Audit.--A certified economic development organization
22must submit an audit to the authority every three years
23demonstrating that requirements continue to be satisfied.

24(e) Approval.--If the authority determines that the
25application meets the requirements of the guidelines, the
26authority may, in its sole and final discretion, certify the
27applicant as a certified economic development organization.

28§ 1124. Transfer of funds.

29Except for funds in the Pollution Prevention Assistance
30Account, funds may be transferred by an action of the board

1between the Small Business First Fund, the Machinery and
2Equipment Loan Fund and the Industrial Development Fund to
3maximize the effectiveness of the programs.

4§ 1125. Conflict of interest.

5A member of the board or an employee of the authority may
6not, either directly or indirectly, be a party to or have any
7financial interest in any contract or agreement arising pursuant
8to this chapter or the programs.

9SUBCHAPTER D

10TRANSFER OF LOANS

11Sec.

121130. Transfer of loans from certain programs.

13§ 1130. Transfer of loans from certain programs.

14(a) Loan transfer.--On the effective date of this section,
15outstanding loans executed under the Small Business First
16Program and the Machinery and Equipment Loan Program and
17approved loan commitments that have not been executed by the
18effective date of this section, including necessary
19documentation and collateral security associated with the loans,
20shall be transferred from the department to the authority.

21(b) Loan commitments.--An approved loan commitment
22transferred under subsection (a) shall be executed in accordance
23with 12 Pa.C.S. Chs. 23 (relating to small business first) and
2429 (relating to machinery and equipment loans).

25(c) Legal actions.--On the effective date of this section,
26each legal action relating to a loan under the Small Business
27First Program or the Machinery and Equipment Loan Program shall
28be transferred to the authority.

29(d) Security or collateral.--No money deposited or to be
30deposited into the Small Business First Fund or the Machinery

1and Equipment Loan Fund may serve as security or collateral for
2any debt incurred by the board before the effective date of this
3section, unless proceeds made available by the debt are used by
4the board to fund loans or other financial assistance under the
5Small Business First Program or the Machinery and Equipment Loan
6Program to effectively carry out the purposes of the programs.

7Section 10. Repeals are as follows:

8(1) The General Assembly declares that the repeals under
9paragraph (2) are necessary to effectuate the addition of 12
10Pa.C.S. Ch. 30.

11(2) The following provisions of the act of May 17, 1956
12(1955 P.L.1609, No.537), known as the Pennsylvania Industrial
13Development Authority Act, are repealed:

14(i) The definition of "critical economic area" in
15section 3.

16(ii) Section 6.

17(iii) Section 7.

18(iv) Section 7.1.

19Section 11. The addition of 12 Pa.C.S. Ch. 30 is a
20continuation of sections 6, 7 and 7.1 of the act of May 17, 1956 
21(1955 P.L.1609, No.537), known as the Pennsylvania Industrial 
22Development Authority Act. Except as otherwise provided in 12
23Pa.C.S. Ch. 30, all activities initiated under sections 6, 7 and
247.1 of the Pennsylvania Industrial Development Authority Act
25shall continue and remain in full force and effect and may be
26completed under 12 Pa.C.S. Ch. 30. Orders, regulations, rules
27and decisions which were made under sections 6, 7 and 7.1 of the
28Pennsylvania Industrial Development Authority Act and which are
29in effect on the effective date of section 10(2)(ii), (iii) and
30(iv) of this act shall remain in full force and effect until

1revoked, vacated or modified under 12 Pa.C.S. Ch. 30. Contracts,
2obligations and collective bargaining agreements entered into
3under sections 6, 7 and 7.1 of the Pennsylvania Industrial 
4Development Authority Act are not affected nor impaired by the
5repeal of sections 6, 7 and 7.1 of the Pennsylvania Industrial 
6Development Authority Act.

7Section 12. This act shall take effect as follows:

8(1) The following shall take effect in 60 days:

9(i) The amendment of 12 Pa.C.S. § 302.

<-10(ii) The addition of 12 Pa.C.S. Ch. 4.

<-11(ii) <-(iii) The addition of Part IV heading
12immediately preceding Chapter 51 of Title 12.

<-13(iii) <-(iv) The repeal of Part IV heading of Title
1412.

15(2) This section shall take effect immediately.

16(3) The remainder of this act shall take effect <-July 
<-17November 1, 2014, or immediately, whichever is later.