PRIOR PRINTER'S NO. 229 PRINTER'S NO. 1118
No. 10 Session of 1997
INTRODUCED BY ROBBINS, HART, MUSTO, SALVATORE, O'PAKE, HELFRICK,
COSTA, WHITE, KUKOVICH, THOMPSON, AFFLERBACH AND MADIGAN,
JANUARY 29, 1997
SENATOR PUNT, COMMUNITY AND ECONOMIC DEVELOPMENT, AS AMENDED,
JUNE 2, 1997
AN ACT
1 Providing for a capital access program in the Department of <--
2 Community and Economic Development; providing for a loan
3 program for industrial, commercial and agricultural purposes;
4 prescribing powers and duties of the Department of Community
5 and Economic Development; establishing a Capital Reserve Fund
6 and Capital Access Fund; and making an appropriation.
7 TABLE OF CONTENTS
8 Section 1. Short title.
9 Section 2. Definitions.
10 Section 3. Capital Access Program.
11 Section 4. Powers of department.
12 Section 5. Eligible loans.
13 Section 6. Loan restrictions.
14 Section 7. Loan provisions.
15 Section 8. Enrollment of loans.
16 Section 9. Capital Reserve Fund.
17 Section 10. Premium payments and transfers to Capital Reserve
18 Fund.
19 Section 11. Limitation of transfers.
1 Section 12. Pledge of Capital Reserve Fund.
2 Section 13. Reports and records.
3 Section 14. Claims by lender to Capital Reserve Fund.
4 Section 15. Disbursement of Capital Reserve Fund.
5 Section 16. Recovery by lender subsequent to claim.
6 Section 17. Technical assistance.
7 Section 18. Subrogation of claims.
8 Section 19. Assignment of rights.
9 Section 20. Recovered funds.
10 Section 21. Excess capital reserve funds.
11 Section 22. Termination.
12 Section 23. Capital Access Fund.
13 Section 24. Appropriation.
14 Section 25. Effective date.
15 AMENDING THE ACT OF JUNE 29, 1996 (P.L.434, NO.67), ENTITLED "AN <--
16 ACT TO ENHANCE JOB CREATION AND ECONOMIC DEVELOPMENT BY
17 PROVIDING FOR AN ANNUAL FINANCING STRATEGY, FOR OPPORTUNITY
18 GRANTS, FOR JOB CREATION TAX CREDITS, FOR SMALL BUSINESS
19 ASSISTANCE AND FOR THE SMALL BUSINESS ADVOCACY COUNCIL;
20 CONFERRING POWERS AND DUTIES ON VARIOUS ADMINISTRATIVE
21 AGENCIES AND AUTHORITIES; FURTHER PROVIDING FOR VARIOUS
22 FUNDS; AND MAKING REPEALS," FURTHER DEFINING "FINANCING
23 PROGRAMS"; AND PROVIDING FOR THE COMMUNITY DEVELOPMENT BANK
24 GRANT AND LOAN PROGRAM.
25 The General Assembly of the Commonwealth of Pennsylvania
26 hereby enacts as follows:
27 Section 1. Short title. <--
28 This act shall be known and may be cited as the Capital
29 Access Program Act.
30 Section 2. Definitions.
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1 The following words and phrases when used in this act shall
2 have the meanings given to them in this section unless the
3 context clearly indicates otherwise:
4 "Affiliate." When describing a relationship with the lender,
5 shall refer to the same relationship as the relationship between
6 an affiliate and an institution as defined in section 102 of the
7 act of November 30, 1965 (P.L.847, No.356), known as the Banking
8 Code of 1965.
9 "Amount" or "proceeds." When used in connection with a loan
10 or loans, only the amount covered under the loan agreement.
11 "Borrower." The recipient of a loan which has been or will
12 be filed by the lender for enrollment under the Capital Access
13 Program created under section 3.
14 "Capital Access Fund." The fund created under section 23.
15 "Capital Reserve Fund" or "reserve fund." The fund created
16 under section 9.
17 "Department." The Department of Community and Economic
18 Development of the Commonwealth.
19 "Early loan." An enrolled loan if at the time of enrollment
20 the amount of previously enrolled loans made by the lender under
21 the program was less than $6,000,000.
22 "Eligible loan" or "enrolled loan." A loan enrolled by the
23 Department of Community and Economic Development under the terms
24 of section 8.
25 "Lender." A financial institution that has entered into an
26 agreement with the Department of Community and Economic
27 Development to participate in the Capital Access Program.
28 "Passive real estate ownership." Ownership of real estate
29 for the purpose of deriving income from speculation, trade or
30 rentals, except that the term does not include:
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1 (1) the ownership of that portion of real estate being
2 used or intended to be used for the operation of the business
3 of the owner of the real estate; or
4 (2) the ownership of real estate for the purpose of
5 construction or renovation.
6 "Program." The Capital Access Program created under section
7 3.
8 "Secretary." The Secretary of Community and Economic
9 Development of the Commonwealth.
10 Section 3. Capital Access Program.
11 There is hereby created a Capital Access Program in the
12 Department of Community and Economic Development. The purpose of
13 this program is to:
14 (1) Assist small businesses in meeting their financial
15 obligations and responsibilities by providing greater access
16 to capital through private lending institutions.
17 (2) Encourage investment and reinvestment by small
18 businesses in economic opportunities that will provide jobs,
19 stimulate economic growth and encourage more export trade.
20 (3) Encourage lending institutions to make lending
21 capital available to small businesses by minimizing the
22 potential risks associated with business loans.
23 Section 4. Powers of department.
24 The department shall have the power and duty to:
25 (1) Administer the program.
26 (2) Enter into contracts.
27 (3) Inspect, as the department may determine necessary,
28 the files of a lender relating to any loans enrolled under
29 the program during the normal business hours of the lender.
30 (4) Market the program to businesses and lending
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1 institutions within this Commonwealth.
2 (5) Develop the program so that the degree of
3 flexibility for the department and the lending institutions
4 is maximized and the State oversight of the individual loans
5 is minimized.
6 (6) Promulgate regulations not inconsistent with this
7 act.
8 Section 5. Eligible loans.
9 An eligible loan includes all of the following:
10 (1) A loan made for industrial, commercial or
11 agricultural purposes.
12 (2) Refinancing of a loan made for one or more of the
13 purposes in paragraph (1), in accordance with section 8(e).
14 (3) A line of credit established between the lender and
15 borrower which is used for any of the purposes of paragraph
16 (1) or (2).
17 Section 6. Loan restrictions.
18 Eligible loans shall meet all of the following criteria:
19 (1) The lender has not made the loan in order to enroll
20 in the program prior debt which is not covered under the
21 program and which is or was owed by the borrower to the
22 lender.
23 (2) The proceeds of the loan will not be used for that
24 portion of a project or development devoted to housing.
25 (3) The proceeds of the loan will not be used to finance
26 passive real estate ownership.
27 (4) The proceeds of the loan will be used to finance
28 industrial, commercial or agricultural products, projects or
29 enterprises manufactured or located within this Commonwealth
30 or products manufactured in Pennsylvania to be sold in
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1 international markets which will foster economic development
2 in this Commonwealth.
3 Section 7. Loan provisions.
4 An eligible loan agreement may provide for an interest rate,
5 fees and other terms and conditions as the borrower and lender
6 may agree. If the loan amount to be borrowed is determined by a
7 commitment agreement that establishes a line of credit, the
8 amount of the loan is the maximum amount available to the
9 borrower under the agreement.
10 Section 8. Enrollment of loans.
11 (a) Enrollment form.--To enroll a loan under this program,
12 the lender shall file a completed loan enrollment form with the
13 department. The lender shall certify all of the following to the
14 department as part of the filing:
15 (1) The borrower is a corporation, partnership, joint
16 venture, sole proprietorship, cooperative or other entity,
17 whether profit or nonprofit, which is authorized to do
18 business in this Commonwealth, and the proceeds of the loan
19 will be used for an endeavor related to industrial,
20 commercial or agricultural enterprises.
21 (2) The borrower is not an executive officer, director
22 or principal shareholder of the lender, or a member of the
23 immediate family of an executive officer, director or
24 principal shareholder of the lender, or a related interest of
25 any such executive officer, director, principal shareholder
26 or member of the immediate family. For purposes of this
27 paragraph, the terms "executive officer," "director,"
28 "principal shareholder," "immediate family" and "related
29 interest" shall refer to the same relationship to the lender,
30 whether or not the lender is a member bank, as the
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1 relationship specified for those terms in connection with
2 member banks in 12 CFR Pt. 215 (relating to loans to
3 executive officers, directors, and principal shareholders of
4 member banks).
5 (3) The lender has received from the borrower a written
6 representation, warranty, pledge or waiver stating that the
7 borrower does not have a legal, beneficial or equitable
8 interest in the nonrefundable premium charges, determined in
9 accordance with section 10, or any other moneys credited to
10 the reserve fund established to cover losses sustained by the
11 lender on enrolled loans.
12 (4) The lender has complied with all Federal and State
13 laws, rules and regulations pertaining to the making of the
14 loan.
15 (5) Premium charges, determined in accordance with
16 section 10, required of the borrower and lender have been
17 deposited in the lender's capital reserve fund account.
18 (b) Filing schedule.--The lender shall file the loan
19 enrollment form not later than five business days after the
20 lender makes the loan. The date on which the lender makes a loan
21 is the date on which the lender first disburses proceeds of the
22 loan to the borrower or an earlier date on which the loan
23 documents have been executed and the lender has obligated itself
24 to disburse the proceeds of the loan. The filing date of a loan
25 enrollment form is the date on which the lender delivers the
26 required documentation to the department or mails it to the
27 department by certified mail.
28 (c) Department procedures.--When the department receives the
29 loan enrollment form, the department shall enroll the loan and
30 shall deliver to the lender within five business days of receipt
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1 an acknowledgment of enrollment, signed by the secretary,
2 including documentation of the amount being transferred to the
3 lender's capital reserve fund account.
4 (d) Amount covered.--When filing a loan enrollment form, the
5 lender may specify an amount to be covered under the program.
6 The amount may be less than the total amount of the loan.
7 (e) Amount covered in refinancing.--
8 (1) In the case of a loan to refinance a loan previously
9 made to the borrower by the lender that was not enrolled
10 under the program, the lender may obtain coverage under the
11 program for an amount not exceeding the amount of additional
12 financing.
13 (2) If an enrolled loan is refinanced and the total
14 amount to be covered under the program does not exceed the
15 covered amount of the loan as previously enrolled, the
16 refinanced loan may continue as an enrolled loan without
17 payment of an additional premium charge or transfers by the
18 department to the lender's capital reserve fund account.
19 (3) If an enrolled loan is refinanced in an amount
20 exceeding the amount of the loan as previously enrolled, the
21 lender may obtain coverage of the amount of the refinanced
22 loan that exceeds the amount covered when the loan was
23 previously enrolled by refiling the loan for enrollment.
24 (4) Fluctuations in the outstanding balance of a line of
25 credit, without increasing the enrolled amount under the
26 program, are not a refinancing of the loan.
27 (f) Termination of enrollment.--If the outstanding balance
28 of an enrolled loan which is not a line of credit is reduced to
29 zero, the loan is no longer an enrolled loan. If an enrolled
30 loan which is a line of credit has an outstanding balance of
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1 zero for a 12-month period, the line of credit is no longer an
2 enrolled loan, unless, before the expiration of the 12-month
3 period, the lender reaffirms in writing to the borrower that the
4 line of credit will remain open and the borrower acknowledges
5 the reaffirmation in writing.
6 Section 9. Capital Reserve Fund.
7 (a) Capital Reserve Fund.--There is hereby established a
8 special account in the State Treasury, to be known as the
9 Capital Reserve Fund, to which shall be credited all required
10 premium charges to be paid by lenders and borrowers and
11 transfers made by the department from the Capital Access Fund.
12 (b) Capital Reserve Fund accounts.--Within the Capital
13 Reserve Fund, an administrative capital reserve fund account
14 shall be established for each lender participating in the
15 program for the purpose of receiving all required premium
16 charges to be paid by the lender and the borrower on loans made
17 by that lender and transfers made by the department from the
18 Capital Access Fund. Earnings on the moneys held in a lender's
19 capital reserve fund account shall be credited to the lender's
20 account for the purposes of this act.
21 Section 10. Premium payments and transfers to Capital Reserve
22 Fund.
23 The premium charge payable to the lender's capital reserve
24 fund account by the lender and the borrower in connection with a
25 loan filed for enrollment shall be determined by the lender. The
26 premium paid by the borrower shall not be less than 1.5% nor
27 greater than 3.5% of the amount of the loan. The premium paid by
28 the lender shall be equal to the amount of the premium paid by
29 the borrower. The lender may recover from the borrower the cost
30 of the lender's premium payment, in any manner in which the
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1 lender and borrower agree. When enrolling a loan, the department
2 shall transfer into the lender's capital reserve fund account
3 from the Capital Access Fund a premium amount determined as
4 follows:
5 (1) If the amount of any loan plus the amount of loans
6 previously enrolled by the lender is less than $2,000,000,
7 the premium amount transferred must be equal to 150% of the
8 combined premiums paid into the lender's capital reserve fund
9 account by the borrower and the lender for each enrolled
10 loan.
11 (2) If, prior to the enrollment of the loan, the amount
12 of loans previously enrolled by the lender equal or exceeds
13 $2,000,000, the premium amount transferred must be equal to
14 the combined premiums paid into the lender's capital reserve
15 fund account by the borrower and the lender for each enrolled
16 loan.
17 (3) If the amount of loans previously enrolled by the
18 lender is less than $2,000,000, but the enrollment of a loan
19 will cause the aggregate amount of all enrolled loans made by
20 the lender to exceed $2,000,000, the premium amount
21 transferred shall be equal to a percentage of the combined
22 amount paid by the lender and the borrower. The percentage
23 shall be determined by:
24 (i) multiplying by 150 that portion of the loan
25 which, when added to the amount of all previously
26 enrolled loans, totals $2,000,000;
27 (ii) multiplying the balance of the loan by 100; and
28 (iii) adding the products of the two amounts and
29 dividing the sum by the total amount of the loan.
30 Section 11. Limitation of transfers.
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1 (a) Maximum amount.--A maximum premium amount of $150,000
2 may be transferred to the capital reserve fund account of each
3 lender participating in the program by the department over any
4 three-year period in connection with any one borrower or any
5 group of borrowers among which a common enterprise exists. The
6 maximum premium amount may be exceeded upon the written request
7 by a lender only if the department approved in writing the
8 transfer of an amount in excess of $150,000.
9 (b) Definition.--As used in this section, the term "common
10 enterprise" has the meaning given it in 12 CFR Pt. 32 (relating
11 to lending limits).
12 Section 12. Pledge of Capital Reserve Fund.
13 The department shall pledge to the lender that the money in
14 its capital reserve fund account will be available to pay
15 claims, that the lender will have a first security interest in
16 the money in the capital reserve fund account to pay the claims
17 and that the department will not encumber or pledge the money to
18 any other party.
19 Section 13. Reports and records.
20 (a) Quarterly reports.--The department shall provide to the
21 lender quarterly transaction reports indicating the balance in
22 the reserve fund account, payments and transfers into the
23 reserve fund account, withdrawals from the reserve fund account
24 and interest or income earned on money credited to the reserve
25 fund account.
26 (b) Location of records.--The records of the department with
27 respect to all payments and transfers into the lender's reserve
28 fund account, withdrawals from the reserve fund account and
29 interest or income earned on the money credited to the reserve
30 fund account shall be available to the lender at the offices of
19970S0010B1118 - 11 -
1 the department during normal business hours.
2 Section 14. Claims by lender to Capital Reserve Fund.
3 (a) Claim process.--If the lender charges off all or part of
4 an enrolled loan, the lender may file a claim with the
5 department.
6 (b) Elements of claim.--The lender's claim may include, in
7 addition to the amount of principal charged off plus accrued
8 interest, one-half of the documented out-of-pocket expenses
9 incurred in pursuing its collection efforts, including
10 preservation of collateral. The amount of principal and accrued
11 interest included in the claim may not exceed the principal
12 amount covered under the program upon enrollment, plus accrued
13 interest attributable to the covered principal amount.
14 (c) Charge-off determination.--The lender shall determine
15 when and how much to charge off on an enrolled loan in a manner
16 consistent with its normal method for making these
17 determinations on similar loans which are not enrolled loans.
18 (d) Multiple claims.--If the lender files two or more claims
19 contemporaneously and there are insufficient funds in its
20 capital reserve fund account at that time to cover the entire
21 amount of the claims, the lender may designate the order of
22 priority in which the department shall pay the claims.
23 Section 15. Disbursement of Capital Reserve Fund.
24 (a) Procedure.--Upon receipt by the department of a claim
25 filed by the lender, the department shall, within 20 business
26 days, pay from the lender's capital reserve fund account the
27 amount of the claim as submitted, unless the information
28 provided by the lender was known by the lender to be false at
29 the time the loan was filed for enrollment.
30 (b) Insufficient reserves.--If there is insufficient money
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1 in the lender's capital reserve fund account to cover the entire
2 amount of the lender's claim, the department shall pay to the
3 lender an amount equal to the current balance in the capital
4 reserve fund account, and the following shall apply:
5 (1) If the enrolled loan for which the claim has been
6 filed is not an early loan, the payment fully satisfies the
7 claim and the lender has no right to receive any additional
8 amount from its capital reserve fund account with respect to
9 that claim.
10 (2) If the loan is an early loan, the partial payment
11 does not satisfy the lender's claim, and, at any time that
12 the remaining balance of the claim is not greater than 75% of
13 the balance in the lender's capital reserve fund account at
14 the time of the loss, the department, upon request of the
15 lender, shall pay the remaining balance of the claim.
16 Section 16. Recovery by lender subsequent to claim.
17 (a) Payment to department.--If, subsequent to payment of a
18 claim by the department, the lender recovers from a borrower any
19 amount for which payment of the claim was made, the lender shall
20 promptly pay to the department for deposit in its capital
21 reserve fund account the amount recovered, less one-half of any
22 documented out-of-pocket expenses incurred. The lender shall
23 have first priority to fully recover its loss on an enrolled
24 loan. Any amount in excess of the amount of full recovery shall
25 be paid to the department by the lender for deposit in the
26 lender's capital reserve fund account.
27 (b) Computing loss.--For the purposes of this section, the
28 lender's loss on an enrolled loan includes any losses on the
29 loan including principal, accrued interest and one-half of the
30 documented out-of-pocket expenses attributable to principal
19970S0010B1118 - 13 -
1 amounts in excess of that amount covered under the program or
2 the principal amount included in the claim.
3 Section 17. Technical assistance.
4 When a borrower becomes 60 days delinquent in the payments of
5 an enrolled loan or before a lender files a claim with the
6 department, the lender shall notify the department of the
7 delinquency. The department, after notification, shall inform
8 the borrower of the technical assistance providers in the
9 borrower's area that may assist in solving any business or
10 management problems experienced by the borrower.
11 Section 18. Subrogation of claims.
12 The department may exercise the right of subrogation under
13 this section if the department determines, in the department's
14 discretion, that the lender has not exercised reasonable care
15 and diligence in its collection activities with respect to the
16 loan or that there is a reasonable basis for believing that the
17 lender will not exercise reasonable care and diligence in the
18 future with respect to the collection activities.
19 Section 19. Assignment of rights.
20 If the payment of a claim has fully covered the lender's loss
21 on an enrolled loan or if the payment of a claim when combined
22 with any recovery from the borrower has fully covered the
23 lender's loss, the department upon request, is subrogated to the
24 rights of the lender with respect to any collateral, security or
25 other right of recovery in connection with the loan that has not
26 been realized by the lender. The lender thereafter shall assign
27 to the department any right or interest in any collateral,
28 security or other right of recovery in connection with the loan.
29 Section 20. Recovered funds.
30 Any money received by the department as a result of
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1 enforcement actions taken with respect to any security or other
2 rights of recovery must be promptly deposited by the department
3 in the lender's capital reserve fund account, less any out-of-
4 pocket expenses incurred by the department in taking the
5 enforcement actions.
6 Section 21. Excess capital reserve funds.
7 (a) Reports.--The lender shall file quarterly reports with
8 the department indicating the number and aggregate outstanding
9 balance of all enrolled loans as of the end of each quarter. A
10 quarterly report is not required for any quarter that ends with
11 a balance in the lender's capital reserve fund account of zero,
12 except that a calendar year end report must be filed. In
13 computing the aggregate outstanding balance of all enrolled
14 loans, the balance of any loan may not be greater than the
15 covered amount of the loan as enrolled.
16 (b) Withdrawal of excess reserve funds.--If reports filed
17 under this section indicate that for the immediately preceding
18 24-month period the balance in the lender's capital reserve fund
19 account continually exceeded the aggregate outstanding balance
20 of all enrolled loans, the department may withdraw from the
21 lender's capital reserve fund account, on or before the last day
22 of the month for which a report is due, an amount not greater
23 than the amount by which the lender's capital reserve fund
24 account balance exceeded the aggregate outstanding balance of
25 all enrolled loans as of the most recent report, unless the
26 lender has provided to the department adequate documentation
27 that, at some time during the 24-month period, the aggregate
28 outstanding balance of all enrolled loans exceeded the balance
29 then in its reserve fund account. Any amounts withdrawn under
30 this section from the lender's capital reserve fund account
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1 shall be transferred to the reserve fund.
2 (c) Report not filed.--If a report required under this
3 section is not filed within 30 days of its original due date,
4 the department may withdraw from the lender's capital reserve
5 fund account based on the department's determination from an
6 inspection of the lender's files an amount not greater than the
7 amount by which the lender's capital reserve fund account
8 balance exceeded the aggregate outstanding balance of all
9 enrolled loans as of the date for which the report was required
10 to be filed.
11 Section 22. Termination.
12 The department may terminate the obligation to a lender to
13 enroll loans under the program if the department determines that
14 the lender is not in substantial compliance with the
15 requirements of the program. The termination takes effect on the
16 date specified in the notice of termination, except that the
17 termination does not apply to any loan made on or before the
18 date on which the notice of termination is received by the
19 lender. If the department is terminating the enrollment of loans
20 for all participating lenders under the program, the department
21 shall provide notice of at least 90 days to the lender. Any
22 terminations under this section are prospective only and do not
23 apply to any loans previously financed. After termination, the
24 amount covered under the program may not be increased beyond the
25 covered amount as previously enrolled.
26 Section 23. Capital Access Fund.
27 There is hereby established a special account in the State
28 Treasury, to be known as the Capital Access Fund, to which shall
29 be credited all program appropriations by the General Assembly.
30 The department shall requisition from the fund the amounts as
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1 may be necessary to provide adequate funds to the Capital
2 Reserve Fund. Earnings on the moneys held in the fund shall also
3 be credited to the fund for the purposes set forth in this act.
4 Section 24. Appropriation.
5 The sum of $6,000,000, or as much thereof as may be
6 necessary, is hereby appropriated to the Department of Community
7 and Economic Development for the fiscal year July 1, 1997, to
8 June 30, 1998, to carry out the provisions of this act.
9 Section 25. Effective date.
10 This act shall take effect July 1, 1997, or immediately,
11 whichever is later.
12 SECTION 1. THE DEFINITION OF "FINANCING PROGRAM" IN SECTION <--
13 103 OF THE ACT OF JUNE 29, 1996 (P.L.434, NO.67), KNOWN AS THE
14 JOB ENHANCEMENT ACT, IS AMENDED TO READ:
15 SECTION 103. DEFINITIONS.
16 THE FOLLOWING WORDS AND PHRASES WHEN USED IN THIS ACT SHALL
17 HAVE THE MEANINGS GIVEN TO THEM IN THIS SECTION UNLESS THE
18 CONTEXT CLEARLY INDICATES OTHERWISE:
19 * * *
20 "FINANCING PROGRAMS." ALL OF THE FOLLOWING PROGRAMS:
21 (1) THE PENNSYLVANIA INDUSTRIAL DEVELOPMENT AUTHORITY.
22 (2) PENNSYLVANIA ECONOMIC DEVELOPMENT FINANCING
23 AUTHORITY.
24 (3) PENNSYLVANIA MINORITY BUSINESS DEVELOPMENT AUTHORITY
25 BOARD.
26 (4) THE INFRASTRUCTURE DEVELOPMENT PROGRAM.
27 (5) THE OPPORTUNITY GRANT PROGRAM.
28 (6) THE INDUSTRIAL SITES REUSE PROGRAM.
29 (7) THE CUSTOMIZED JOB TRAINING PROGRAM.
30 (8) THE MACHINERY AND EQUIPMENT LOAN PROGRAM.
19970S0010B1118 - 17 -
1 (9) THE SMALL BUSINESS FIRST PROGRAM.
2 (10) JOB CREATION TAX CREDIT.
3 (10.1) THE COMMUNITY DEVELOPMENT BANK GRANT AND LOAN
4 PROGRAM.
5 (11) ANY OTHER SIMILAR PROGRAM OPERATED BY THE
6 DEPARTMENT.
7 * * *
8 SECTION 2. THE ACT IS AMENDED BY ADDING A CHAPTER TO READ:
9 CHAPTER 15
10 COMMUNITY DEVELOPMENT BANK GRANT
11 AND LOAN PROGRAM
12 SECTION 1501. DECLARATION OF PURPOSE.
13 THE PURPOSE OF THIS CHAPTER IS TO CREATE A PROGRAM TO MORE
14 EFFECTIVELY ADDRESS THE CAPITAL NEEDS OF LOCAL COMMUNITY
15 DEVELOPMENT AND ECONOMIC DEVELOPMENT INSTITUTIONS BY ENCOURAGING
16 AND SUPPORTING THE CREATION, DEVELOPMENT AND OPERATIONS OF
17 COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS THROUGH A PROGRAM
18 OF GRANTS AND LOANS.
19 SECTION 1502. DEFINITIONS.
20 THE FOLLOWING WORDS AND PHRASES WHEN USED IN THIS CHAPTER
21 SHALL HAVE THE MEANINGS GIVEN TO THEM IN THIS SECTION UNLESS THE
22 CONTEXT CLEARLY INDICATES OTHERWISE:
23 "AUTHORITY." THE PENNSYLVANIA ECONOMIC DEVELOPMENT FINANCING
24 AUTHORITY.
25 "BOARD." THE BOARD OF DIRECTORS OF THE PENNSYLVANIA ECONOMIC
26 DEVELOPMENT FINANCING AUTHORITY.
27 "COMMUNITY DEVELOPMENT FINANCIAL INSTITUTION." A COMMUNITY
28 DEVELOPMENT FINANCIAL INSTITUTION CERTIFIED IN ACCORDANCE WITH
29 THE COMMUNITY DEVELOPMENT BANKING AND FINANCIAL INSTITUTIONS ACT
30 OF 1994 (PUBLIC LAW 103-325, 108 STAT 2163).
19970S0010B1118 - 18 -
1 "COMMUNITY DEVELOPMENT LOAN." A LOAN FROM A COMMUNITY
2 DEVELOPMENT FINANCIAL INSTITUTION TO LOW-INCOME INDIVIDUALS,
3 BUSINESSES AND NONPROFIT ORGANIZATIONS FOR THE PURPOSE OF
4 REVITALIZING DISTRESSED COMMUNITIES AND BUILDINGS.
5 "DEPARTMENT." THE DEPARTMENT OF COMMUNITY AND ECONOMIC
6 DEVELOPMENT OF THE COMMONWEALTH.
7 "ELIGIBLE INSTITUTION." A COMMUNITY DEVELOPMENT FINANCIAL
8 INSTITUTION WHICH HAS BEEN ACCREDITED BY THE DEPARTMENT OF
9 COMMUNITY AND ECONOMIC DEVELOPMENT UNDER SECTION 1506.
10 "PARTICIPATING INVESTORS." PUBLIC OR PRIVATE ENTITIES WHICH
11 ELECT TO PARTICIPATE WITH THE AUTHORITY IN THE LOAN PROGRAMS SET
12 FORTH IN THIS CHAPTER.
13 "PROGRAM." THE COMMUNITY DEVELOPMENT BANK GRANT AND LOAN
14 PROGRAM ESTABLISHED UNDER THIS CHAPTER.
15 SECTION 1503. ESTABLISHMENT.
16 THERE IS HEREBY ESTABLISHED WITHIN THE PENNSYLVANIA ECONOMIC
17 DEVELOPMENT FINANCING AUTHORITY, A GRANT AND LOAN PROGRAM TO BE
18 ADMINISTERED IN ACCORDANCE WITH SECTION 7 OF THE ACT OF AUGUST
19 23, 1967 (P.L.251, NO.102), KNOWN AS THE ECONOMIC DEVELOPMENT
20 FINANCING LAW.
21 SECTION 1504. OPERATION OF PENNSYLVANIA COMMUNITY DEVELOPMENT
22 BANK.
23 (A) OPERATION.--THE AUTHORITY SHALL HAVE THE POWER TO
24 OPERATE THE PROGRAM UNDER THE NAME OF THE PENNSYLVANIA COMMUNITY
25 DEVELOPMENT BANK.
26 (B) OPERATIONAL COMMITTEE.--THE AUTHORITY MAY OPERATE THE
27 PROGRAM BY ESTABLISHING AN 11 MEMBER COMMITTEE OF THE BOARD TO
28 WHICH THE AUTHORITY MAY DELEGATE ALL OR PART OF ITS POWERS TO
29 OPERATE THE PROGRAM. THE COMMITTEE SHALL CONSIST OF THE
30 SECRETARY OF COMMUNITY AND ECONOMIC DEVELOPMENT, WHO SHALL ACT
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1 AS CHAIRMAN, THE SECRETARY OF BANKING AND NINE MEMBERS APPOINTED
2 BY THE GOVERNOR REPRESENTING PARTICIPATING INVESTORS AND MEMBERS
3 OF THE GENERAL PUBLIC.
4 (C) LIMITATION ON VOTING.--NO REPRESENTATIVE OF AN ELIGIBLE
5 INSTITUTION MAY SERVE AS A VOTING MEMBER OF THE COMMITTEE.
6 (D) TERMS.--THE MEMBERS SHALL SERVE AT THE PLEASURE OF THE
7 APPOINTING AUTHORITY.
8 (E) EXPENSES.--THE MEMBERS OF THE COMMITTEE SHALL BE
9 ENTITLED TO NO COMPENSATION FOR THEIR SERVICES BUT SHALL BE
10 ENTITLED TO REIMBURSEMENT FOR ALL NECESSARY EXPENSES INCURRED IN
11 CONNECTION WITH THE PERFORMANCE OF THEIR DUTIES AS MEMBERS OF
12 THE COMMITTEE.
13 (F) QUORUM.--A MAJORITY OF THE MEMBERS OF THE COMMITTEE
14 SHALL CONSTITUTE A QUORUM FOR THE TRANSACTION OF ANY PROGRAM
15 BUSINESS.
16 SECTION 1505. DEPOSITS.
17 (A) SPECIAL ACCOUNTS.--MONEY APPROPRIATED TO THE PROGRAM MAY
18 BE DEPOSITED BY THE AUTHORITY IN BANKS OR TRUST COMPANIES IN
19 SPECIAL ACCOUNTS. THE SPECIAL ACCOUNTS MUST BE CONTINUOUSLY
20 SECURED BY A PLEDGE OF DIRECT OBLIGATIONS OF THE UNITED STATES
21 OR THE COMMONWEALTH, HAVING AN AGGREGATE MARKET VALUE, EXCLUSIVE
22 OF ACCRUED INTEREST, AT LEAST EQUAL TO THE BALANCE ON DEPOSIT IN
23 THE ACCOUNT. THE SECURITIES SHALL BE DEPOSITED WITH THE
24 AUTHORITY OR BE HELD BY A TRUSTEE OR AGENT APPROVED BY THE
25 AUTHORITY. BANKS AND TRUST COMPANIES ARE AUTHORIZED TO GIVE
26 SECURITY UNDER THIS PARAGRAPH.
27 (B) DISBURSEMENTS.--MONEY IN ACCOUNTS UNDER SUBSECTION (A)
28 SHALL BE PAID OUT ON ORDER OF THE AUTHORITY.
29 SECTION 1506. ACCREDITATION.
30 (A) GENERAL RULE.--THE DEPARTMENT SHALL ACCREDIT COMMUNITY
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1 DEVELOPMENT FINANCIAL INSTITUTIONS TO PARTICIPATE IN THE PROGRAM
2 ESTABLISHED UNDER SECTION 1503. THE DEPARTMENT MAY REVOKE
3 ACCREDITATION FROM COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS
4 WHICH NO LONGER MEET ACCREDITATION CRITERIA.
5 (B) CRITERIA.--DEPARTMENT CRITERIA FOR ACCREDITATION SHALL
6 INCLUDE CERTIFICATION UNDER THE COMMUNITY DEVELOPMENT BANKING
7 AND FINANCIAL INSTITUTIONS ACT OF 1994 (PUBLIC LAW 103-325, 108
8 STAT. 2163) AND SUCH OTHER CRITERIA AS THE DEPARTMENT DEEMS
9 APPROPRIATE.
10 SECTION 1507. GRANTS.
11 THE AUTHORITY MAY ISSUE GRANTS TO ELIGIBLE INSTITUTIONS OR TO
12 NONPROFIT ORGANIZATIONS WHICH ARE ATTEMPTING TO OBTAIN FEDERAL
13 CERTIFICATION OR DEPARTMENT ACCREDITATION AS A COMMUNITY
14 DEVELOPMENT FINANCIAL INSTITUTION. THE AUTHORITY MAY ISSUE
15 GRANTS FOR THE PURPOSE OF DEVELOPING OR ENHANCING THE ABILITY OF
16 THE COMMUNITY DEVELOPMENT FINANCIAL INSTITUTION OR NONPROFIT
17 ORGANIZATION TO BE ACCREDITED AS AN ELIGIBLE INSTITUTION AND TO
18 PARTICIPATE IN THE LOAN PROGRAM ESTABLISHED BY THIS CHAPTER.
19 SECTION 1508. AUTHORITY LOANS.
20 THE AUTHORITY MAY MAKE LOANS TO ELIGIBLE INSTITUTIONS FROM
21 MONEYS APPROPRIATED TO THE PROGRAM ON SUCH TERMS AND CONDITIONS
22 AS THE AUTHORITY MAY DETERMINE. ANY SUCH LOANS SHALL BE MADE BY
23 THE AUTHORITY PURSUANT TO THE ACT OF AUGUST 23, 1967 (P.L.251,
24 NO.102), KNOWN AS THE ECONOMIC DEVELOPMENT FINANCING LAW. LOANS
25 TO ELIGIBLE INSTITUTIONS MAY BE MADE BY THE AUTHORITY AS THE
26 SOLE LENDER OR MAY BE MADE IN COOPERATION WITH PARTICIPATING
27 INVESTORS PURSUANT TO AGREEMENTS ENTERED INTO IN ACCORDANCE WITH
28 THIS CHAPTER. LOAN REPAYMENTS SHALL BE USED BY THE AUTHORITY TO
29 MAKE NEW LOANS TO ELIGIBLE INSTITUTIONS.
30 SECTION 1509. COMMUNITY DEVELOPMENT LOANS.
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1 ELIGIBLE INSTITUTIONS THAT RECEIVE LOANS FROM THE AUTHORITY
2 UNDER SECTION 1508 SHALL MAKE COMMUNITY DEVELOPMENT LOANS
3 PURSUANT TO GUIDELINES ESTABLISHED BY THE DEPARTMENT. COMMUNITY
4 DEVELOPMENT PROJECTS WHICH ARE CURRENTLY ASSISTED THROUGH
5 EXISTING PUBLIC FINANCIAL PROGRAMS SHALL BE INELIGIBLE FOR
6 ASSISTANCE UNDER THIS CHAPTER.
7 SECTION 1510. AGREEMENTS.
8 THE AUTHORITY MAY ENTER INTO AGREEMENTS AND CONTACTS AS IT
9 SHALL DETERMINE ARE APPROPRIATE FOR THE EXERCISE OF THE POWERS
10 GRANTED TO IT BY THIS CHAPTER, INCLUDING AGREEMENTS WITH
11 PARTICIPATING INVESTORS.
12 SECTION 1511. ADDITIONAL POWERS.
13 IN ORDER TO OPERATE THE PROGRAM, THE AUTHORITY SHALL HAVE ALL
14 OTHER POWERS GRANTED TO IT PURSUANT TO THE ACT OF AUGUST 23,
15 1967 (P.L.251, NO.102), KNOWN AS THE ECONOMIC DEVELOPMENT
16 FINANCING LAW. THE AUTHORITY MAY OPERATE OTHER COMMUNITY
17 DEVELOPMENT PROGRAMS UNDER THE NAME OF THE PENNSYLVANIA
18 COMMUNITY DEVELOPMENT BANK, INCLUDING PROGRAMS AUTHORIZED AND
19 FUNDED UNDER THE FEDERAL RURAL DEVELOPMENT BLOCK GRANTS PROGRAM.
20 SECTION 3. THIS ACT SHALL TAKE EFFECT JULY 1, 1997, OR
21 IMMEDIATELY, WHICHEVER IS LATER.
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