PRINTER'S NO. 1625
No. 1317 Session of 2003
INTRODUCED BY SCRIMENTI, MAY 5, 2003
REFERRED TO COMMITTEE ON COMMERCE, MAY 5, 2003
AN ACT
1 Amending the act of August 23, 1967 (P.L.251, No.102), entitled,
2 as amended, "An act providing for the incorporation as public
3 instrumentalities of the Commonwealth and as bodies corporate
4 and politic of industrial and commercial development
5 authorities for municipalities, counties and townships;
6 prescribing the rights, powers and duties of such authorities
7 hereafter incorporated; authorizing such authorities to
8 acquire, by gift or purchase, to construct, improve and
9 maintain industrial, specialized, or commercial development
10 projects including projects for the elimination or prevention
11 of blight and the control of air and water pollution, and to
12 borrow money and issue bonds therefor; providing for the
13 payment of such bonds and giving security therefor, and
14 prescribing the rights of the holders of such bonds;
15 authorizing the lease or sale of industrial, specialized, or
16 commercial development projects to industrial, specialized,
17 or commercial enterprises; authorizing any county,
18 municipality or township to transfer or convey to such
19 authorities, any facilities or property available for
20 industrial, specialized, or commercial development projects;
21 exempting the property and securities of such authorities
22 from taxation; authorizing such authorities to enter into
23 contracts with and to accept grants from the Federal
24 Government or any agency thereof; and providing for approval
25 by the Secretary of Commerce of the proceedings relating to
26 industrial, specialized, or commercial development projects
27 of such authorities," further providing for definitions, for
28 financing authority indebtedness and financing and for
29 prohibitions; establishing the Pennsylvania Opportunity Fund
30 Oversight Committee; making an appropriation; and making
31 editorial changes.
32 The General Assembly of the Commonwealth of Pennsylvania
1 hereby enacts as follows:
2 Section 1. The definitions of "department" and "secretary"
3 in section 3 of the act of August 23, 1967 (P.L.251, No.102),
4 known as the Economic Development Financing Law, amended
5 December 17, 1993 (P.L.490, No.74), are amended and the section
6 is amended by adding a definition to read:
7 Section 3. Definitions.--As used in this act:
8 * * *
9 "Department" means the Department of [Commerce] Community and
10 Economic Development of the Commonwealth.
11 * * *
12 "Oversight committee" means the Pennsylvania Opportunity Fund
13 Oversight Committee established in section 15.4.
14 * * *
15 "Secretary" means the Secretary of [Commerce] Community and
16 Economic Development of the Commonwealth.
17 * * *
18 Section 2. Sections 6.3(a), 6.4 and 15.2 of the act, amended
19 or added December 17, 1993 (P.L.490, No.74), are amended to
20 read:
21 Section 6.3. Financing Authority Indebtedness.--(a) The
22 financing authority shall have the power and is hereby
23 authorized to issue its limited obligation revenue bonds and
24 other types of financing as in the judgment of the financing
25 authority shall be necessary to provide sufficient funds for any
26 related or unrelated projects: (i) provided that the issuance by
27 the financing authority of taxable or tax-exempt bonds on behalf
28 of projects comprising industrial facilities, commercial
29 facilities, pollution control facilities, energy conversion
30 facilities, energy producing facilities and disaster relief
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1 project facilities, other than projects to be funded by the
2 oversight committee, shall have been authorized by an industrial
3 and commercial development authority or a group of industrial
4 and commercial development authorities or by an industrial
5 development agency or a group of industrial and development
6 agencies; (ii) further provided that the financing authority may
7 issue taxable or tax-exempt bonds on behalf of interagency
8 projects other than projects to be funded by the oversight
9 committee only if the applicant has first applied to the
10 Pennsylvania Infrastructure Investment Authority for financing
11 under the provisions of the act of March 1, 1988 (P.L.82,
12 No.16), known as the "Pennsylvania Infrastructure Investment
13 Authority Act," and the Pennsylvania Infrastructure Investment
14 Authority in writing refers the applicant to the financing
15 authority to finance all or part of the interagency project in
16 accordance with this act; and (iii) further provided that the
17 issuance by the financing authority of taxable or tax-exempt
18 bonds for a public facility other than projects to be funded by
19 the oversight committee, interagency projects and projects for
20 roads and transportation facilities and transportation systems
21 of every kind shall have been authorized by a municipality,
22 municipal authority or Commonwealth agency and only if both the
23 applicant and the financing authority have determined that the
24 cost of obtaining the financing for the public facility will be
25 reduced through the issuance of bonds through the financing
26 authority. For purposes of the determination required in this
27 subsection, any financing for a public facility that the
28 financing authority reasonably believes could have received a
29 rating of "A" or better from either Moody's Investors Service or
30 Standard & Poor's Corporation shall be presumed not to be
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1 eligible for financing by the financing authority. The financing
2 authority is authorized and empowered to use the proceeds of any
3 bonds issued for the making of loans, purchasing loans,
4 mortgages, security interests or loan participations and paying
5 all incidental expenses in connection therewith, paying expenses
6 of authorizing and issuing the bonds, paying interest on the
7 bonds until revenues thereof are available in sufficient amounts
8 and funding the reserves as the financing authority deems
9 necessary and desirable.
10 * * *
11 Section 6.4. Financing Authority Loans.--(a) The financing
12 authority shall ascertain to its satisfaction that:
13 (1) Firm commitments satisfactory to the financing authority
14 have been obtained from responsible financial sources, which may
15 include a Federal agency, project applicant or the project user,
16 for the portion of project costs in excess of any loan or other
17 financing requested from the financing authority.
18 (2) [A] Except for projects to be funded by the oversight
19 committee, a firm commitment satisfactory to the financing
20 authority from the project applicant or project user has been
21 obtained to lease or use the project after acquisition is
22 completed.
23 (3) [The] Except for projects to be funded by the oversight
24 committee, the project user may reasonably be expected to comply
25 with the terms of such lease or use.
26 (4) [The] Except for projects to be funded by the oversight
27 committee, the project complies with all rules and regulations
28 of the financing authority, if any.
29 (b) In addition to other provisions of this section limiting
30 the power of the financing authority to make loans or provide
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1 other financing in respect to a particular project, no funds of
2 the financing authority shall be used in respect of any project
3 if the financing authority would be required to operate, service
4 or maintain the project pursuant to any lease or other agreement
5 except upon foreclosure or except upon the occurrence of a
6 default in the payment or terms of any loan made. Nothing shall
7 prevent the financing authority from transferring such property
8 to the project applicant, project user or either of their
9 designees at the end of the term of such financing.
10 Section 15.2. Prohibition.--(a) Except as provided herein,
11 no Commonwealth agency under the control of the executive branch
12 shall be a project applicant under this act[. Operating expenses
13 of any Commonwealth agency under the control of the executive
14 branch are not an eligible project cost.] except that the
15 department may be a project applicant for a project funded by
16 the oversight committee.
17 (b) The Department of Public Welfare may be a project
18 applicant to provide for the conversion of medical assistance
19 services from a fee-for-service basis to a prepaid managed-care
20 basis subject to prior approval of this conversion mechanism by
21 the Health Care Financing Agency of the Federal Department of
22 Health and Human Services and prior notice of project details
23 and Federal approval to the chairman and minority chairman of
24 the Senate Appropriations Committee and the chairman and
25 minority chairman of the House Appropriations Committee. Maximum
26 term of the bonds, notes or other evidences of indebtedness
27 issued for this project shall be five years.
28 Section 3. The act is amended by adding sections to read:
29 Section 15.3. Funding.--(a) The Pennsylvania First
30 Industries Program shall provide loan financing or loan
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1 guarantees to owners of businesses engaged in tourism-related
2 activities or to farmers engaged in production agriculture.
3 (1) The oversight committee may establish a loan and loan
4 guarantee procedure for the purpose of this program, or it may
5 contribute money to the department for the use by the department
6 under one or more programs administered by the department which
7 are consistent with the purpose of the program.
8 (2) The oversight committee may commit up to one hundred
9 million dollars ($100,000,000) in first round funds to this
10 program.
11 (3) Before any project is approved under this program, the
12 oversight committee or the department, as appropriate, shall
13 develop written guidelines.
14 (b) With regard to funding under subsection (a), there is no
15 limit on the amount of second or subsequent round funding which
16 may be provided by the oversight committee if the second or
17 subsequent round funding comes from sources other than bond
18 proceeds.
19 Section 15.4. Oversight Committee.--(a) There is
20 established in the financing board the Pennsylvania Opportunity
21 Fund Oversight Committee. The oversight committee shall consist
22 of the following:
23 (1) The Governor.
24 (2) The State Treasurer.
25 (3) The Secretary of the Budget.
26 (4) The secretary.
27 (5) The Secretary of Banking.
28 (6) Four members of the General Assembly appointed as
29 follows:
30 (i) One member appointed by the President pro tempore of the
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1 Senate.
2 (ii) One member appointed by the Minority Leader of the
3 Senate.
4 (iii) One member appointed by the Speaker of the House of
5 Representatives.
6 (iv) One member appointed by the Minority Leader of the
7 House of Representatives.
8 (7) Four members appointed by the Governor.
9 (b) Terms of members shall be as follows:
10 (1) A member under subsection (a)(6) shall serve at the
11 pleasure of the appointing authority.
12 (2) Two members under subsection (a)(7) shall serve terms of
13 four years from appointment and until a successor is appointed,
14 and two members under subsection (a) shall serve terms of two
15 years from appointment and until a successor is appointed.
16 (c) Members of the oversight committee shall serve without
17 compensation but shall be reimbursed for actual and reasonable
18 expenses incurred in the performance of their official duties.
19 (d) The Governor shall serve as chairperson of the oversight
20 committee, or the Governor may designate another member to serve
21 as chairperson. The members of the oversight committee shall
22 select one member to serve as secretary.
23 (e) A designee designated by a member under subsection (a)
24 (1) through (6) may vote and otherwise act on behalf of the
25 member. The designation must be in writing and be delivered to
26 the oversight committee. The designation shall continue in
27 effect until revoked or amended in writing.
28 (f) A majority of the members of the oversight committee
29 then serving shall constitute a quorum of the oversight
30 committee. Only a member or a designee who is physically present
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1 at a meeting or able to participate fully in the deliberations
2 by appropriate telecommunications means shall count toward a
3 quorum of the oversight committee.
4 Section 15.5. Powers and Duties of Oversight Committee.--(a)
5 The oversight committee shall have the powers and duties
6 delegated to it by the financing authority. In addition, the
7 oversight committee shall have the following powers and duties:
8 (1) To authorize and direct the issuance of bonds by the
9 financing authority, which, upon authorization by the oversight
10 committee, shall be deemed for all purposes to have been issued
11 by resolution of the financing authority.
12 (2) To control and manage, invest and reinvest money
13 received from bond financing, from repayments and redeposits or
14 from any other source derived and dedicated for use in programs
15 financed by the oversight committee under section 15.3 and for
16 all expenses associated with the program. Funds may be deposited
17 by the oversight committee in banks or trust companies in
18 special accounts for use by the oversight committee as set forth
19 in this clause, including the use of interest earned on the
20 accounts. Money in the accounts shall be paid out on order of
21 the oversight committee. Funds deposited by the oversight
22 committee in special accounts in banks or trust companies may be
23 prudently invested in any of the following:
24 (i) Obligations of the United States Government, its
25 agencies and instrumentalities, which have a liquid market with
26 a readily determinable market value.
27 (ii) Certificates of deposit and other evidences of deposit
28 at financial institutions, bankers' acceptances and commercial
29 paper rated in the highest tier, for example, A1, P1, F1 or D1
30 or higher, by a nationally recognized rating agency.
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1 (iii) Obligations of State and local governments, and of
2 public authorities which are rated in one of the top three
3 rating categories by a nationally recognized rating agency.
4 (iv) Repurchase agreements underlying purchased securities
5 of which consist of investments set forth in clause (1), (2) or
6 (3).
7 (v) Money market funds:
8 (A) which are regulated by the Securities Exchange
9 Commission having aggregate assets of at least fifty thousand
10 dollars ($50,000) on the date of investment; and
11 (B) the portfolio of which consists only of dollar-
12 denominated securities.
13 (3) To hold, purchase, sell, lend, assign, transfer or
14 dispose of any category of securities and investments, in which
15 money dedicated for use in programs financed by the oversight
16 committee has been invested, and the proceeds of such
17 investments.
18 (4) To make equity capital available to early to mid-stage
19 companies located within this Commonwealth that operate within
20 targeted growth segments of the economy and to provide for the
21 repayment of such capital.
22 (5) To make loans and other capital available to private
23 developers, redevelopers or other real estate development
24 entities engaged in real estate projects for redevelopment or
25 revitalization of real estate located within this Commonwealth
26 and to provide for the repayment of such loans and investments.
27 (6) To make loans and grants to assist in the acquisition
28 and preparation of sites for future development. Loans and
29 grants may be made by providing funds to the department to
30 administer on behalf of the oversight committee.
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1 (7) To use funds to guarantee tax increment financing
2 projects.
3 (8) To make loans or to guarantee loans to promote
4 agriculture and tourism in this Commonwealth.
5 (b) Actions taken by the oversight committee shall not be
6 subject to review by the financing board.
7 (c) In the exercise of its powers and duties, the oversight
8 committee shall exercise that degree of judgment, skill and care
9 under the circumstances then prevailing that persons of
10 prudence, discretion and intelligence, that are familiar with
11 investment matters, exercise in the management of their own
12 affairs, not in regard to speculation but in regard to permanent
13 disposition of the funds, considering the probable income to be
14 derived from the investments and the probable safety of their
15 capital.
16 (d) The members of the oversight committee and their
17 professional personnel shall stand in a fiduciary relationship
18 to the Commonwealth and its citizens regarding the investments
19 of the money of the fund and shall not profit, either directly
20 or indirectly, with respect thereto.
21 Section 15.6. Annual Report.--By November 30, 2004, and
22 annually thereafter, the oversight committee shall submit a
23 report to the Governor and to the chair and minority chair of
24 the Appropriations Committee of the Senate and the chair and
25 minority chair of the Appropriations Committee of the House of
26 Representatives. The report shall provide an analysis of the
27 status of the current investments and transactions made by the
28 oversight committee or the department over the previous fiscal
29 year for the program.
30 Section 4. The sum of $12,000,000, or as much thereof as may
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1 be necessary, is hereby appropriated to the Pennsylvania
2 Economic Development Financing Authority for the fiscal year
3 July 1, 2003, to June 30, 2004, to carry out the provisions of
4 this act.
5 Section 5. This act shall take effect July 1, 2003, or
6 immediately, whichever is later.
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