PRINTER'S NO. 70
No. 63 Session of 1989
INTRODUCED BY GIGLIOTTI, McNALLY, KAISER, ROBINSON, TANGRETTI,
PRESTON, DeLUCA, PISTELLA, MAYERNIK AND GAMBLE, JANUARY 23,
1989
REFERRED TO COMMITTEE ON BUSINESS AND COMMERCE,
JANUARY 23, 1989
AN ACT
1 Creating the Pennsylvania Industrial Development Finance
2 Corporation.
3 The General Assembly of the Commonwealth of Pennsylvania
4 hereby enacts as follows:
5 Section 1. Short title.
6 This act shall be known and may be cited as the Pennsylvania
7 Industrial Development Finance Corporation Act.
8 Section 2. Legislative findings and policy.
9 (a) Legislative findings.--The General Assembly finds and
10 declares as follows:
11 (1) There exist in communities throughout this
12 Commonwealth blighted areas which are inimical to the safety,
13 health, morals and welfare of not only the residents of those
14 areas but also of all citizens of this Commonwealth.
15 (2) These conditions decrease the value of private
16 investments and threaten sources of public revenue.
17 (3) Because of the economic and social interdependence
1 of communities, the economic and industrial development of
2 political subdivisions of this Commonwealth is substantially
3 impaired.
4 (4) There exists in this Commonwealth a condition of
5 substantial and persistent unemployment and underemployment
6 seriously aggravated by an unacceptably low level of economic
7 activity in blighted areas.
8 (5) These conditions result in making such blighted
9 areas socioeconomic liabilities harmful to the social and
10 economic well-being of the communities in which they exist by
11 depreciating property values, reducing tax revenues and
12 lowering communitywide values.
13 (6) These conditions cannot be dealt with effectively by
14 private enterprise under existing law without additional
15 alternatives being provided to encourage the stimulation of
16 private investment.
17 (7) The Commonwealth's present mechanism for stimulating
18 industrial development, such as the Pennsylvania Industrial
19 Development Authority and local industrial development
20 authorities, is insufficient to alleviate these conditions.
21 (8) Continued investment by industrial development
22 corporations and agencies in projects in blighted areas is
23 necessary for the development, redevelopment,
24 industrialization or reindustrialization of communities
25 affected by blight.
26 (9) The provision of capital to viable businesses in
27 these areas is necessary to the redevelopment of the areas.
28 (10) These conditions are a menace and are beyond remedy
29 or control solely by regulatory processes in the exercise of
30 the police power and cannot be dealt with effectively by
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1 private enterprise under existing law without the additional
2 aids granted by this act.
3 (11) The development, redevelopment, industrialization
4 or reindustrialization of communities according to sound and
5 approved plans will promote public health, safety,
6 convenience and welfare.
7 (12) Increasing the number of development projects in
8 blighted areas, providing capital to industrial development
9 corporations and agencies and to businesses in these areas,
10 and stimulating private investment in these businesses and
11 areas are public purposes and uses for which public money may
12 be expended and invested.
13 (b) Policy.--It is the policy of this Commonwealth to
14 promote the health, safety and welfare of its citizens by the
15 creation of a body corporate and politic to be known as the
16 Pennsylvania Industrial Development Finance Corporation, which
17 shall exist and operate for the public purposes of the
18 development, redevelopment, industrialization or
19 reindustrialization of blighted areas in this Commonwealth.
20 These purposes are hereby declared to be public uses for which
21 public money may be spent.
22 Section 3. Definitions.
23 The following words and phrases when used in this act shall
24 have the meanings given to them in this section unless the
25 context clearly indicates otherwise:
26 "Capital participation investments." Common and preferred
27 stock, convertible securities, warrants, subscriptions, options
28 to acquire, capital loans, working capital or inventory loans,
29 royalties, and any lawful derivations of the foregoing.
30 "Corporation" or "PIDFC." The Pennsylvania Industrial
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1 Development Finance Corporation created by this act.
2 "Costs of a project." Any or all costs associated with the
3 design, planning, acquisition or rehabilitation and
4 implementation of a project undertaken in a target area which
5 can reasonably be recovered in the financing of a project. These
6 include, but are not limited to, the cost of:
7 (1) Construction or rehabilitation.
8 (2) Property rights.
9 (3) Easements and franchises acquired.
10 (4) Financing charges.
11 (5) Interest prior to and during construction.
12 (6) Engineering and legal expenses.
13 (7) Plans, specifications and surveys.
14 (8) Estimates of costs and other expenses necessary or
15 incident to a determination of feasibility, construction,
16 rehabilitation and placing the project in operation.
17 (9) The provision of working capital, seed money and any
18 other costs determined by the directors of the IDC or IDA to
19 be necessary in carrying out the purposes of this act.
20 "Industrial Development Corporation" or "IDC" or "Industrial
21 Development Agency" or "IDA." An authority organized and
22 existing under the act of May 2, 1945 (P.L.382, No.164), known
23 as the Municipality Authorities Act of 1945, or under the act of
24 August 23, 1967 (P.L.251, No.102), known as the Industrial and
25 Commercial Development Authority Law, or a council of
26 governments or similar entity organized and existing under the
27 act of July 12, 1972 (P.L.762, No.180), referred to as the
28 Intergovernmental Cooperation Law, or a nonprofit corporation
29 organized and existing under the laws of this Commonwealth,
30 regardless of the particular name, whose members or shareholders
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1 receive no profit, which shall carry out certain public purposes
2 and which, unless otherwise specifically provided by law, has
3 bylaws providing that:
4 (1) It is organized to operate within a specified
5 geographical area coincident with the existing boundaries of
6 any political subdivision or municipality.
7 (2) Membership in the IDC or IDA shall be open to all
8 residents of the specified geographical area who are 18 years
9 of age or older.
10 (3) The IDC and IDA shall have five directors, all to be
11 appointed by the governing body of the political subdivision
12 or municipality, with each director having an equal vote.
13 (4) The directors of the IDC or IDA initially appointed
14 shall continue in office for terms of one to five years,
15 respectively, from the date of their appointment and until
16 their respective successors shall be duly appointed, the
17 terms of each director to be designated by the appointing
18 body at the time of his appointment. Their successors shall
19 be appointed for terms of five years, except that any person
20 appointed to fill a vacancy shall serve only for the
21 unexpired term. A director may be eligible for reappointment.
22 (5) The directors of the IDC or IDA shall be entitled to
23 no compensation for their services as directors but shall be
24 entitled to reimbursement for all necessary expenses incurred
25 in connection with the performance of their duties as
26 directors.
27 "Paid-in capital." All moneys received in return for capital
28 stock of the PIDFC.
29 "PIDA." The Pennsylvania Industrial Development Authority.
30 "Primary employment." Work which pays at least the minimum
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1 wage, offers adequate fringe benefits, including health
2 insurance, and is not seasonal or part time.
3 "Project." Any industrial or manufacturing activity or other
4 economic development activity considered an eligible project
5 under the act of August 23, 1967 (P.L.251, No.102), known as the
6 Industrial and Commercial Development Authority Law, or any coal
7 mining activity and undertaken in a target area, designed to
8 reduce conditions of blight, economic depression or widespread
9 reliance on public assistance.
10 "Target area." Any contiguous geographic area in which the
11 board of directors of a particular IDC or IDA finds and
12 designates, in accordance with criteria established by the
13 Pennsylvania Industrial Development Finance Corporation, that
14 substantial conditions of unemployment, economic recession,
15 declining local tax base or curtailment of municipal services,
16 widespread reliance on public assistance or blight as that term
17 is construed in accordance with the act of May 24, 1945
18 (P.L.991, No.385), known as the Urban Redevelopment Law, exist
19 or threaten to exist because of impending economic dislocation
20 in a community, including actual or threatened plant closings or
21 the jeopardy posed by a community's reliance on a single
22 capital-intensive industry.
23 Section 4. Pennsylvania Industrial Development Finance
24 Corporation established.
25 There is hereby created a body corporate and politic, to be
26 known as the Pennsylvania Industrial Development Finance
27 Corporation or PIDFC. The PIDFC is hereby constituted a public
28 instrumentality and the exercise by the PIDFC of the powers
29 conferred by this act shall be deemed to be the performance of
30 an essential governmental function. The PIDFC is hereby placed
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1 in the Economic Development Partnership created by Executive
2 Order of the Governor dated February 4, 1987, No.4.
3 Section 5. Powers and duties of directors.
4 (a) Directors.--The corporation shall consist of nine
5 directors. One member shall be the Executive Director of the
6 Economic Development Partnership, one shall be the Secretary of
7 Community Affairs and one shall be the Secretary of Labor and
8 Industry. The Governor shall appoint two members, both of whom
9 shall be residents of target areas or members of industrial
10 development corporations or agencies in such areas. The Majority
11 and Minority Leaders of the Senate and House of Representatives
12 shall each appoint one member.
13 (b) Term.--Each member appointed shall serve a term of five
14 years, except that, in making initial appointments, the Governor
15 shall appoint one member to serve for a term of one year and one
16 member to serve for a term of two years. The Minority Leaders of
17 the Senate and House of Representatives shall each appoint one
18 member to serve for a term of three years each. The Majority
19 Leaders of the Senate and House shall each appoint one member to
20 serve for a term of four years each.
21 (c) Compensation.--The members who are not otherwise
22 employees of the Commonwealth shall each receive a per diem
23 amount of $200 for attendance at official meetings. Each
24 director shall be entitled to reimbursement for actual and
25 necessary expenses incurred in the performance of his official
26 duties.
27 (d) Vacancies.--Any person appointed to fill a vacancy in
28 the office of a director shall be appointed by the official who
29 appointed his predecessor and shall serve for only the unexpired
30 term. Any member shall be eligible for reappointment. A member
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1 may be removed from his appointment by his appointing power only
2 for good cause.
3 (e) Leadership.--The Executive Director of the Economic
4 Development Partnership shall serve as chairman, and another
5 member as vice chairman, and the chairman shall designate a
6 secretary-treasurer who need not be a member of the board.
7 (f) Quorum.--Five of the directors of the corporation shall
8 constitute a quorum and five affirmative votes shall be
9 necessary for the transaction of business or the exercise of any
10 power or function of the corporation.
11 (g) Disclosure.--The corporation, its directors, officers
12 and employees shall be subject to the provisions of section 1 of
13 the act of October 4, 1978 (P.L.883, No.170), referred to as the
14 Public Official and Employee Ethics Law, except that the
15 corporation may purchase from, sell to, borrow from, loan to,
16 contract with or otherwise deal with any public nonprofit
17 industrial development corporation or agency organized to carry
18 out the purposes of this act, of which any director of the
19 corporation is also a member or officer, if such interest is
20 disclosed in advance to members of the board and recorded in the
21 minutes of the corporation and if no director having such a
22 financial interest may participate in any decision affecting
23 such transaction.
24 (h) Corporation president.--The president of the corporation
25 shall be appointed and his salary established by the board of
26 directors. The president shall be the chief administrative and
27 operational officer of the corporation and shall direct and
28 supervise administrative affairs and the general management of
29 the corporation. The president may employ such other employees
30 as shall be designated by the board of directors, shall attend
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1 meetings of the board of directors, shall cause copies to be
2 made of all minutes and other records and documents of the
3 corporation and shall certify that such copies are true copies.
4 All persons dealing with the corporation may rely upon such
5 certification.
6 (i) Annual report.--The chairman of the board of directors
7 of the PIDFC shall prepare an annual report of the corporation's
8 activities three months after the end of the fiscal year and
9 submit copies to the Governor, Speaker of the House of
10 Representatives and President pro tempore of the Senate.
11 (j) Audit.--The accounts and books of the PIDFC, including
12 its receipts, disbursements, contracts, mortgages, investments
13 and other matters relating to its finances, operations and
14 affairs, shall be examined and audited, from time to time, by
15 the Auditor General.
16 Section 6. Powers of Pennsylvania Industrial Development
17 Finance Corporation.
18 (a) General powers.--The PIDFC shall have the power to:
19 (1) Adopt bylaws for the regulation of its affairs and
20 the conduct of its business.
21 (2) Adopt an official seal.
22 (3) Sue and be sued in its own name.
23 (4) Make and execute contracts and all other instruments
24 necessary or convenient for the exercise of its powers and
25 functions.
26 (5) Acquire, hold and dispose of personal property for
27 its corporate purposes.
28 (6) Enter into agreements or other transactions with any
29 Federal or State agency.
30 (7) Acquire, sell, transfer or convey real property, or
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1 any interest in real property, where the acquisition or
2 transfer protects or secures an investment or loan in which
3 the agency has an interest to lease the property when a sale,
4 transfer or conveyance cannot be effected with reasonable
5 promptness or at a reasonable price.
6 (8) Invest any funds not required for immediate
7 disbursement or funds held in reserves or sinking funds or in
8 investments as may be lawful for fiduciaries in the
9 Commonwealth.
10 (9) Borrow money by making notes and issuing bonds,
11 including tax-exempt revenue bonds, and secure such bonds by
12 the pledge of revenues, mortgages and notes of others.
13 (10) Employ a president, who shall be the chief
14 executive officer of the corporation, and such other agents,
15 employees and professional and business advisers as may, from
16 time to time, be necessary in the judgment of the board of
17 directors, and fix their compensation.
18 (11) Appear in its own behalf before boards,
19 commissions, departments or other agencies of government.
20 (12) Procure insurance against any loss in connection
21 with its property in those amounts, and from those insurers,
22 as may be necessary or desirable.
23 (13) Consent, subject to the provisions of any contract
24 with noteholders or bondholders, whenever it deems it
25 necessary or desirable to fulfill the purposes of this act,
26 to the modification, with respect to rate of interest, time
27 of payment of any installment of principal or interest, or
28 any other terms, of any mortgage, mortgage loan, mortgage
29 loan commitment, contract or agreement of any kind to which
30 the PIDFC is a party.
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1 (14) Do any and all things necessary or convenient to
2 carry out its purposes and exercise the powers expressly
3 given and granted in this act.
4 (15) Receive and accept from any Federal or State agency
5 grants, loans or advances for or in aid of the purposes of
6 this act and to receive and accept contributions from any
7 source of either money, property, labor or other things of
8 value, to be held, used and applied for these purposes.
9 (16) Create, issue, buy and sell stock and other capital
10 participation instruments, and hold such stock and capital
11 participation instruments; and underwrite the creation of a
12 capital market for these securities in a manner which
13 provides first offer of resale to the industrial development
14 corporation or agency, business or residents of the target
15 area and which is designed to enhance development of capital
16 ownership in the target area.
17 (17) Provide and pay for such advisory services and
18 technical assistance as may be necessary or desirable to
19 carry out the purposes of this act.
20 (18) Exercise any other powers or rights or
21 responsibilities of a corporation organized under the laws of
22 the Commonwealth.
23 (b) Establishment of program criteria.--The PIDFC shall,
24 within 30 days from the effective date of this act, devise a set
25 of criteria for a definition of "distressed area" in accordance
26 with statistical information gathered by the PIDFC. This
27 criteria shall include, but not be limited to, substantial
28 conditions of unemployment, economic recession, declining local
29 tax base, curtailment of municipal services, widespread reliance
30 on public assistance and blight as that term is used in the act
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1 of May 24, 1945 (P.L.991, No.385), known as the Urban
2 Redevelopment Law, caused by severe economic dislocation
3 experienced or threatened to be experienced by plant closings or
4 the jeopardy posed by a community's reliance on a single
5 capital-intensive industry. The criteria may be modified by the
6 PIDFC as circumstances warrant.
7 (c) Catalog of programs.--The PIDFC shall, within 30 days of
8 the effective date of this act, catalog all of the economic
9 development programs currently provided by Federal, State and
10 local governments, including industrial development authority
11 programs, and categorize them according to municipality. In
12 addition, the PIDFC will review all applicable regulations and
13 requirements of these programs, proposing changes where
14 necessary to coordinate the programs provided to industries and
15 communities in this Commonwealth to deliver rapid and
16 streamlined assistance to them. Furthermore, the PIDFC shall
17 devise a method to give quick review and priority to any project
18 of any economic development program, including PIDA, which has
19 been certified by the PIDFC. The catalog of economic development
20 programs compiled by the PIDFC shall be reduced to a
21 comprehensible narrative so that any threatened community or
22 jeopardized industry may ascertain the total range of programs
23 available and then, with the aid of the PIDFC, proceed to secure
24 needed assistance.
25 Section 7. Sale of PIDFC stock and purchase of participation
26 instruments.
27 (a) Authorization of treasurer.--The State Treasurer,
28 subject to appropriation from either the Pennsylvania Economic
29 Revitalization Fund or the Economic Development Partnership
30 created by Executive Order of the Governor dated February 4,
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1 1987, or from the issuance of bonds for this purpose, shall
2 purchase shares of the corporation in the amount of $10,000,000.
3 (b) Shares.--In return for the investment, the Commonwealth
4 shall receive 1,000,000 shares of common stock in the
5 corporation. These shares shall constitute the entire issue of
6 common stock.
7 (c) Eligible investment.--The investment outlined in
8 subsections (a) and (b) shall be an eligible investment for the
9 purposes of 24 Pa.C.S. § 8521(o) (relating to management of fund
10 and accounts) and 71 Pa.C.S. § 5931(p) (relating to management
11 of fund and accounts).
12 (d) Liquidation.--Five years from the effective date of this
13 act, the board of directors of the PIDFC shall assist the State
14 Treasurer in developing a plan for the sale of the shares of
15 common stock held by the Commonwealth, which sale may not take
16 place unless specifically hereafter authorized by statute.
17 (e) Separate account.--The corporation shall hold the
18 proceeds of this investment in an account or accounts separate
19 from other funds. The corporation shall use these proceeds only
20 for the following purposes:
21 (1) To purchase capital participation instruments from
22 industrial development corporations or agencies in return for
23 an investment in a specific project only when the board of
24 the PIDFC finds that the industrial development corporation
25 or agency will use the funds in support of a project
26 consistent with the purposes of this act.
27 (2) To invest funds subject to the terms, conditions,
28 limitations and restrictions imposed by law upon fiduciaries;
29 proceeds of the investments may be used to pay for the normal
30 business expenses of the PIDFC.
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1 (3) To make loans to IDC's and IDA's to effect the
2 purposes of this act.
3 (f) Capital participation instruments.--Upon application of
4 an IDC or IDA for a specific project located in a target area,
5 the PIDFC may, subject to the restrictions set forth in this
6 act, agree to purchase capital participation instruments from or
7 make loans to the IDC or IDA, provided that the PIDFC shall find
8 and incorporate in its minutes that:
9 (1) The project is within the scope of this act, is
10 certified by the PIDFC and may reasonably be expected to
11 contribute to the redevelopment of target areas, to the
12 economic development of the Commonwealth or to the increase
13 or maintenance of threatened primary employment.
14 (2) The project plans conform to all applicable
15 environmental zoning, building, planning and sanitation laws.
16 (3) The project will be of public benefit and for a
17 public purpose, and the benefits, including increased
18 employment and improved standard of living, shall accrue
19 primarily to residents of the area served by the IDC or IDA.
20 (4) There is a reasonable expectation that the project
21 will be successful.
22 (5) Private industry has not provided sufficient capital
23 required for the project or sufficient primary employment
24 opportunities in the project area.
25 (6) The PIDFC determines that its participation is
26 necessary to the successful completion of the proposed
27 project because funding for the project is unavailable in the
28 traditional capital markets or because credit has been
29 offered on terms that would preclude the success of the
30 project.
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1 (7) The applicant IDC or IDA meets the standards of an
2 IDC or IDA, respectively, as defined herein and appears able
3 to manage its proposed project responsibilities.
4 (8) The proceeds of the purchase or contract will be
5 used solely in connection with the costs of the project.
6 (9) The parties shall contract for adequate reporting of
7 financial data from the IDC or IDA to the PIDFC. Contract
8 provisions may include a requirement for an annual or other
9 periodic audit of the project books.
10 (10) The PIDFC shall not own more than 49% of the voting
11 stock in any project.
12 (11) The IDC or IDA will maintain sufficient control
13 over the project to ensure that public benefit and public
14 purposes are maintained. This determination shall be
15 satisfactorily complied with if any one of the following is
16 satisfied:
17 (i) The project is conducted by a wholly owned
18 subsidiary of the IDC or IDA or by an agent of the IDC or
19 IDA.
20 (ii) The IDC or IDA owns a majority of the capital
21 stock of the corporation or other organization conducting
22 the project, or the assets, whichever is appropriate.
23 (iii) If the entity is an IDC, the IDC owns a
24 majority of the voting stock of the corporation or other
25 organization conducting the project.
26 (iv) The project is conducted by a nonprofit
27 corporation or other association or entity organized
28 under the laws of the Commonwealth to provide public
29 benefit and which exists for a public purpose.
30 (v) In all other cases, adequate provision is made
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1 for reporting to the IDC or to the IDA, which must
2 approve all major transactions, including, but not
3 limited to, any sale, merger, dissolution, the sale or
4 issue of substantial amounts of stock and corporation
5 reorganization.
6 (12) Provision has been made that, should the PIDFC
7 desire to sell or otherwise dispose of stock received under a
8 contract, the IDC or IDA or its nominee shall have, within
9 120 days, the right of first refusal upon the sale and the
10 right to meet any subsequent bona fide offer by a third
11 party.
12 (13) The PIDFC has not loaned nor invested more than 20%
13 of its lendable or investable resources in any one IDC or
14 IDA, including this investment.
15 Section 8. Eligibility of obligations of PIDFC for investment
16 of public retirement funds.
17 Notwithstanding any other law to the contrary, stocks, bonds,
18 notes or other evidence of indebtedness or obligations of the
19 PIDFC shall constitute permissible investments for moneys held
20 by the State Employees' Retirement Fund, pursuant to 71 Pa.C.S.
21 § 5101 et seq. (relating to State government) and the Public
22 School Employees' Retirement Fund, pursuant to 24 Pa.C.S. § 8101
23 et seq. (relating to education). The investment of moneys from
24 the State Employees' Retirement Fund and from the Public School
25 Employees' Retirement Fund shall not exceed 0.25% of the book
26 value of the total assets of each fund.
27 Section 9. Severability.
28 The provisions of this act are severable. If any provision of
29 this act or its application to any person or circumstance is
30 held invalid, the invalidity shall not affect other provisions
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1 or applications of this act which can be given effect without
2 the invalid provision or application.
3 Section 10. Conflict of law.
4 If the provisions of this act conflict with any other
5 statute, ordinance, regulation or rule, the provisions of this
6 act shall control.
7 Section 11. Effective date.
8 This act shall take effect in 60 days.
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