PRIOR PRINTER'S NO. 3529 PRINTER'S NO. 3562
No. 2472 Session of 2004
INTRODUCED BY D. EVANS, DeWEESE AND VEON, MARCH 23, 2004
AS REPORTED FROM COMMITTEE ON APPROPRIATIONS, HOUSE OF
REPRESENTATIVES, AS AMENDED, MARCH 24, 2004
AN ACT
1 Amending the act of February 9, 1999 (P.L.1, No.1), entitled "An
2 act providing for borrowing for capital facilities;
3 conferring powers and duties on various administrative
4 agencies and officers; making appropriations; and making
5 repeals," adding and amending definitions; and further
6 providing for borrowing limitations, for bond terms and
7 conditions, for the Capital Debt Fund, for registration of
8 bonds, for appropriation for and limitation on redevelopment
9 assistance capital projects and for funding and
10 administration of redevelopment assistance capital projects.
11 The General Assembly of the Commonwealth of Pennsylvania
12 hereby enacts as follows:
13 Section 1. Section 302 of the act of February 9, 1999
14 (P.L.1, No.1), known as the Capital Facilities Debt Enabling
15 Act, amended October 28, 2002 (P.L.889, No.130), is amended to
16 read:
17 Section 302. Definitions.
18 The following words and phrases when used in this chapter
19 shall have the meanings given to them in this section unless the
20 context clearly indicates otherwise:
21 "Acquisition cost." The cost of acquiring:
1 (1) buildings;
2 (2) structures;
3 (3) facilities;
4 (4) property, real, personal or mixed, tangible or
5 intangible; or
6 (5) any other interest;
7 necessary or desirable in connection with a capital project,
8 whether the acquisition be by purchase or by condemnation,
9 including the amount of an award or final judgment in a
10 proceeding to acquire by condemnation lands, rights-of-way,
11 rights-of-slope, property rights, franchises, easements or other
12 interests as deemed necessary or convenient in connection with
13 the acquisition or construction of a project, and costs of
14 options and partial payments on and under options.
15 "Capital project." A project which is financed by debt or by
16 other funds and which meets all of the following:
17 (1) Is an undertaking to construct, repair, renovate,
18 improve, equip, furnish or acquire any:
19 (i) building, structure, facility or physical public
20 betterment or improvement;
21 (ii) land or rights in land; or
22 (iii) furnishings, machinery, apparatus or equipment
23 for a building, structure, facility or physical public
24 betterment or improvement.
25 (2) Is designated in a capital budget as a capital
26 project.
27 (3) Has an estimated useful life in excess of five
28 years.
29 (4) Has an estimated financial cost in excess of
30 $100,000. This paragraph does not apply to original equipment
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1 or furnishings for previously authorized public improvement
2 projects.
3 Capital projects are categorized as [community college
4 projects,] flood control projects, highway projects, [other
5 capital projects, PIDA projects,] public improvement projects,
6 redevelopment assistance capital projects[, redevelopment
7 assistance projects, site development projects] and
8 transportation assistance projects.
9 "Commonwealth agency or authority." Excludes an agency or
10 authority organized by action of a political subdivision.
11 "Community college." An COLLEGE PROJECTS." PROJECTS AT AN <--
12 institution now or hereafter created pursuant to Article XIX-A
13 of the act of March 10, 1949 (P.L.30, No.14), known as the
14 Public School Code of 1949, or the former act of August 24, 1963
15 (P.L.1132, No.484), known as the Community College Act of 1963.
16 ["Community college projects." Projects for a community
17 college of a type which the State Public School Building
18 Authority is authorized to undertake under the provisions of the
19 act of July 5, 1947 (P.L.1217, No.498), known as the State
20 Public School Building Authority Act, to the extent that
21 obligations issued to finance these projects are debt within the
22 meaning of this chapter.]
23 "Construction cost." Obligations incurred:
24 (1) for labor and to contractors, builders and
25 materialmen in connection with the construction, fabrication
26 or assembly of a capital project;
27 (2) for machinery and equipment required for
28 construction under paragraph (1);
29 (3) for the restoration of property damaged or destroyed
30 in connection with construction under paragraph (1); and
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1 (4) for the payment of damages incurred by others
2 incident to or consequent upon construction under paragraph
3 (1) which the Commonwealth or its agency or authority is
4 under legal obligation to pay or desires to pay in settlement
5 of a disputed claim of liability.
6 "Debt." The issued and outstanding obligations of the
7 Commonwealth incurred without a vote of the electorate or
8 incurred with such vote under a law making such debt subject to
9 the provisions of section 7(a)(4) of Article VIII of the
10 Constitution of Pennsylvania. The term includes obligations of
11 Commonwealth agencies and authorities to the extent that such
12 obligations are to be repaid from lease rentals or other charges
13 payable directly or indirectly from revenues of the
14 Commonwealth. The term does not include:
15 (1) that portion of debt which is to be repaid from
16 charges made to the public for the use of the capital
17 projects financed, as such portion of debt may be determined
18 by the Auditor General;
19 (2) obligations to be repaid from lease rentals or other
20 charges payable by a school district or other local taxing
21 authority; or
22 (3) obligations to be repaid by agencies or authorities
23 created for the joint benefit of the Commonwealth and one or
24 more other state governments.
25 "Financial cost." Acquisition cost and construction cost,
26 where applicable, and an allocated portion of all of the
27 following:
28 (1) Fees, expenses and costs of issuing obligations the
29 proceeds of which are used to finance the project.
30 (2) Fees, expenses and costs of issuing and selling
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1 notes or replacement notes issued under this chapter.
2 (3) Establishing and maintaining any purchase, loan or
3 credit agreements in connection with an issue or series of
4 issues of notes, and the fees and expenses of any fiscal or
5 loan and transfer agent and bond counsel incurred in
6 connection with the issue of the obligations.
7 (4) Premiums on insurance in connection with a project
8 during construction.
9 (5) Taxes and other municipal or governmental charges
10 lawfully levied or assessed during construction.
11 (6) Fees and expenses of architects, engineers and other
12 professionals for:
13 (i) making preliminary studies, reports or estimates
14 of costs;
15 (ii) preparing plans and specifications and
16 inspecting and reviewing the progress of construction;
17 and
18 (iii) obtaining abstracts of title, title insurance
19 or title opinions.
20 (7) Costs and expenses of preliminary investigations,
21 preplanning, surveys and reports to determine the proper
22 scope, feasibility and probable costs of capital projects to
23 be included in future capital budgets.
24 (8) Costs of administration, including the salaries and
25 expenses of administrators, reviewing architects and
26 engineers, construction inspectors, accountants and legal
27 counsel of the Commonwealth and its agencies or authorities,
28 incurred for the proper planning and supervision of the
29 capital projects program.
30 "Flood control projects." Projects of the type which the
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1 Water and Power Resources Board is authorized to construct,
2 improve, equip, maintain, acquire or operate under the
3 provisions of the act of August 7, 1936 (1st Sp.Sess., P.L.106,
4 No.46), referred to as the Flood Control Law.
5 "Fund." Any fund other than a fund, or an account in a fund,
6 established by this chapter.
7 "Funding bonds." General obligation bonds used to provide
8 funds for and towards the payment of outstanding notes or to
9 refund other outstanding bonds prior to or at or after the
10 stated maturity date of the bonds being refunded or of the notes
11 being funded.
12 "Highway projects." Projects of a type which the Department
13 of Transportation is authorized to construct, improve, equip,
14 maintain, acquire or operate.
15 "Hospital." As defined in section 802.1 of the act of July
16 19, 1979 (P.L.130, No.48), known as the Health Care Facilities
17 Act.
18 "Issuing officials." The Governor, the Auditor General and
19 the State Treasurer.
20 "Net debt."
21 (1) The aggregate principal amount of all debt; plus
22 (2) the amount of any past due and unpaid interest on
23 that debt; minus
24 (3) all funds held exclusively for the payment of that
25 principal and past due interest.
26 Neither accrued but not yet past due interest nor funds held for
27 the payment of the interest next falling due, up to the amount
28 of such interest, shall be included in such computations.
29 "Notes." Temporary obligations and replacement notes issued
30 by the Commonwealth pursuant to this chapter in anticipation of
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1 bonds.
2 "Obligations." Notes or bonds of the Commonwealth, its
3 agencies or authorities, issued pursuant to any debt authorizing
4 act.
5 ["Other capital projects." Only that undertaking to equip
6 and furnish those public improvement projects which are
7 specifically enumerated under the heading of "Other Capital
8 Projects" in section 3(d) of the act of July 20, 1968 (P.L.560,
9 No.218), known as the Capital Budget Act for the 1968-1969
10 Fiscal Year. Upon final completion of the undertakings
11 authorized by section 3(d) of that act, no equipment or
12 furnishing undertaking or any other undertaking or project shall
13 be listed in any capital budget act for the fiscal year 1969-
14 1970 or any fiscal year thereafter under the heading of "Other
15 Capital Projects"; but if the undertaking or project comes
16 within the meaning of a capital project, it shall be listed in
17 future capital budget acts as a capital project under one of the
18 categories enumerated in paragraph (2) of the definition of
19 "capital project."
20 "PIDA projects." Projects of the type which the Pennsylvania
21 Industrial Development Authority is authorized to finance under
22 the provisions of the act of May 17, 1956 (1955 P.L.1609,
23 No.537), known as the Pennsylvania Industrial Development
24 Authority Act.]
25 "Public improvement projects." Projects of a type which the
26 General State Authority is authorized to construct, improve,
27 equip, furnish, maintain, acquire or operate under the
28 provisions of the act of March 31, 1949 (P.L.372, No.34), known
29 as The General State Authority Act of one thousand nine hundred
30 forty-nine, and projects which the Department of General
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1 Services is authorized to construct, improve, equip, furnish,
2 maintain, acquire or operate, including community college
3 projects.
4 "Redevelopment assistance capital project." The design and
5 construction of facilities which meet the following:
6 (1) Are facilities, other than housing units, highways,
7 bridges, waste disposal facilities, sewage facilities or
8 water facilities[, which cannot obtain funding under other
9 Federal or State programs.] This paragraph includes:
10 (i) Water and sewer infrastructure, bridges and
11 roads when included as part of a business or industrial
12 park facility.
13 (ii) Hospital facilities and capital improvements
14 for hospital facilities.
15 (2) Are economic development projects which generate
16 substantial increases in employment, tax revenues or other
17 measures of economic activity. This paragraph includes
18 projects with cultural, historical or civic significance.
19 (3) Are facilities which have a regional or
20 multijurisdictional impact.
21 (4) Are eligible for tax-exempt bond funding under
22 existing Federal law and regulations.
23 (5) Have a 50% non-State participation documented at the
24 time of application, including a portion of any funds
25 reserved for future physical maintenance and operation of the
26 facilities:
27 (i) at least half of which is secured funding;
28 (ii) toward which the only noncash non-State
29 participation permitted is land or fixed assets which
30 have a substantial useful life and are directly related
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1 to the project; [and]
2 (iii) toward which State funds from other programs
3 may not be used[.]; and
4 (iv) toward which funds from Federal sources may be
5 used.
6 (6) Have a total project cost [as follows:
7 (i) At least $5,000,000 for projects in:
8 (A) counties of the first class; or
9 (B) counties of the second class.
10 (ii) At least $1,000,000 for projects in counties of
11 the second class A through eighth class.
12 (iii) At least $1,000,000 for projects in:
13 (A) municipalities designated as financially
14 distressed municipalities under the act of July 10,
15 1987 (P.L.246, No.47), known as the Municipalities
16 Financial Recovery Act;
17 (B) municipalities which are identified at the
18 time of application by the Department of Community
19 and Economic Development under the department's early
20 warning system as scoring at least one-half standard
21 deviation above the mean score; or
22 (C) municipalities which have part or all of an
23 enterprise zone within the municipal boundaries.] of
24 at least $1,000,000.
25 (7) [Have a cooperation agreement between the applicant
26 and a redevelopment authority or industrial development
27 authority or general purpose unit of local government if the
28 applicant does not administer the grant.] Applicants [can]
29 shall be [any] one of the following:
30 [(i) A redevelopment authority.
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1 (ii) An industrial development authority.]
2 (iii) A general purpose unit of local government.
3 (iv) A local development district which has an
4 agreement with a general purpose unit of local government
5 under which the unit assumes ultimate responsibility for
6 debt incurred to obtain the 50% non-State participation
7 required by paragraph (5).
8 (v) Any public authority established pursuant to the
9 laws of this Commonwealth.
10 (vi) An industrial development agency which has been
11 certified as an industrial development agency by the
12 Pennsylvania Industrial Development Authority Board
13 pursuant to the act of May 17, 1956 (1955 P.L.1609,
14 No.537), known as the Pennsylvania Industrial Development
15 Authority Act, and which is itself or which is acting
16 through a wholly owned subsidiary which is exempt from
17 Federal taxation under section 501(c)(3) of the Internal
18 Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 1
19 et. seq.).
20 The term also includes a fire truck and firefighting equipment
21 to the extent that the request for assistance does not exceed
22 $50,000.
23 ["Redevelopment assistance projects." Projects of the type
24 which the Department of Community and Economic Development is
25 authorized to finance by capital grants under the act of May 20,
26 1949 (P.L.1633, No.493), known as the Housing and Redevelopment
27 Assistance Law, and Reorganization Plan No.2 of 1966.]
28 "Replacement notes." Notes:
29 (1) the net proceeds of which are used to pay principal,
30 accrued interest and premium of previously issued notes or
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1 replacement notes; and
2 (2) which evidence the same temporary borrowing of the
3 Commonwealth as the notes or replacement notes replaced.
4 ["Site development projects." Projects of the type
5 authorized for the Department of Community and Economic
6 Development under the act of May 6, 1968 (P.L.117, No.61), known
7 as the Site Development Act.]
8 "Tax revenues." All revenues from Commonwealth imposed
9 taxes, regardless of the fund to which they are deposited,
10 including revenues from motor vehicle licenses, which are
11 declared to be taxes for purposes of this chapter. The term does
12 not include revenues from any other licenses or from interest,
13 fees, fines or penalties.
14 "Transportation assistance projects." Projects of a type
15 which the Department of Transportation is authorized to
16 construct, improve, equip, furnish, maintain, acquire or operate
17 under 74 Pa.C.S. Pt. II (relating to public transportation) and
18 capital projects which the Department of Transportation is
19 authorized to construct, improve, equip or furnish under the
20 provisions of the act of February 11, 1976 (P.L.14, No.10),
21 known as the Pennsylvania Rural and Intercity Common Carrier
22 Surface Transportation Assistance Act, including the acquisition
23 of property authorized in those statutes.
24 Section 2. Section 305 of the act is amended to read:
25 Section 305. Constitutional limitations, authorizations,
26 issuing officials.
27 Within the limitation set forth in section 7(a)(4) of Article
28 VIII of the Constitution of Pennsylvania, the issuing officials
29 are authorized and directed to borrow, on the credit of the
30 Commonwealth and subject to the conditions and limitations of
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1 [the act of April 9, 1929 (P.L.343, No.176), known as The Fiscal
2 Code] this act, money necessary to carry out the purposes of
3 debt-authorizing acts passed in accordance with the provisions
4 of this chapter.
5 Section 3. Section 307(c) of the act is amended by adding a
6 paragraph to read:
7 Section 307. Bonds, issue of bonds and notes, maturity,
8 interest.
9 * * *
10 (c) Terms and conditions.--
11 (1) Except as set forth in subsection (a) or (b), the
12 terms and conditions of issue, redemption and maturity and
13 time of payment of interest shall be as the issuing officials
14 shall specify. Bonds of any series shall mature within a
15 period not to exceed the estimated useful lives of the
16 capital projects as stated in the debt-authorizing act but
17 not later than 30 years from the date of issuance.
18 (2) The issuing officials shall provide for the
19 amortization of the bonds in substantial and regular amounts
20 over the term of the debt, but the first retirement of
21 principal shall be stated to mature prior to the expiration
22 of a period of time equal to one-tenth of the time from the
23 date of the first obligation issued to evidence the debt to
24 the date of the expiration of the term of the debt.
25 (3) Retirements of principal shall be regular and
26 substantial if made in annual or semiannual amounts whether
27 by stated serial maturities or by mandatory sinking fund
28 retirements computed in accordance with either a level annual
29 debt service plan as nearly as may be or upon the equal
30 annual maturities plan.
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1 (4) If debt is incurred in one issue of bonds to provide
2 funds for and towards the financial cost of capital projects
3 having estimated useful lives of varying length, the
4 following shall apply:
5 (i) The aggregate of the financial costs shall be
6 considered as the debt to be incurred for the purpose of
7 fixing the regular and substantial amounts of principal
8 to be retired.
9 (ii) The term of the debt shall be to the end of the
10 longest estimated useful life for the purpose of
11 determining the first date for the retirement of
12 principal. At the end of the estimated useful life of
13 each project, the aggregate principal retirements
14 required to be made at or before that date shall exceed:
15 (A) the aggregate financial cost of all capital
16 projects having the same or shorter estimated useful
17 lives; or
18 (B) if bonds are issued for less than the full
19 financial cost of all projects being financed in the
20 same category, a proportionate amount in each case.
21 (4.1) The issuing officials are authorized to enter into
22 the following that in the judgment of the issuing officials
23 will assist in managing the interest costs of the debt of the
24 Commonwealth:
25 (i) Interest rate exchange agreements, interest rate
26 cap and floor agreements, forward agreements and other
27 similar agreements.
28 (ii) Contracts to insure or secure payments of
29 principal, interest or the purchase price of bonds.
30 (5) The issuing officials are authorized to carry out
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1 the provisions of this chapter relating to the issuance of
2 bonds and shall determine all matters in connection with the
3 issuance of bonds subject to the provisions hereof.
4 * * *
5 Section 4. Sections 311 and 314 of the act are amended to
6 read:
7 Section 311. Capital Debt Fund; investments; redemption of
8 bonds.
9 (a) Capital Debt Fund.--Bonds issued under this chapter
10 shall be paid at maturity. Interest due after July 1, 1968, on
11 bonds and on notes issued under this chapter shall be paid by
12 the [Board of Finance and Revenue] State Treasurer from the
13 Capital Debt Fund. The General Assembly shall appropriate
14 annually the money necessary to pay the interest on the bonds
15 and notes and the principal of the bonds and notes at maturity
16 if no other provision is made. Money appropriated shall be paid
17 into the Capital Debt Fund by the State Treasurer.
18 (b) Investment.--Money received under subsection (a) prior
19 to the date for disbursement shall be invested by the [board]
20 State Treasurer pending disbursement in securities as are
21 provided by law for the investment of surplus money of the
22 Commonwealth. The investment and the accumulations in the
23 Capital Debt Fund shall be devoted to and be used exclusively
24 for the payment of the interest accruing on the bonds and notes
25 and for the redemption of the bonds and notes at maturity or
26 upon the redemption date if called for prior redemption. The
27 [board] State Treasurer is authorized to use such funds for the
28 purchase and retirement of all or any part of the bonds issued
29 under this chapter; but no purchase may be made which will
30 reduce the money in the Capital Debt Fund below the amount
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1 necessary to pay all principal and interest still to become due
2 in the fiscal year of the purchase. If all or any part of any
3 bonds issued under this chapter are purchased by the
4 Commonwealth, they shall be canceled and returned to the State
5 Treasurer as canceled and paid bonds. Thereafter, all payment of
6 interest on the bonds shall cease; and the canceled bonds and
7 coupons shall be destroyed in accordance with the act of April
8 27, 1925 (P.L.319, No.180), entitled, "An act relating to the
9 destruction of cancelled or unused bonds or other evidences of
10 indebtedness of this Commonwealth."
11 Section 314. Registration of bonds.
12 The [Auditor General shall prepare the] necessary registry
13 books [to] shall be kept in the office of the authorized loan
14 and transfer agent of the Commonwealth for the registration of
15 any bonds of the Commonwealth according to the terms and
16 conditions of issue specified by the issuing officials under
17 section 307(d). Bonds issued without interest coupons attached
18 shall be registered in the registry books kept by the authorized
19 loan and transfer agent of the Commonwealth.
20 Section 5. Section 317 of the act, amended December 23, 2003
21 (P.L.357, No.49), is amended to read:
22 Section 317. Appropriation for and limitation on redevelopment
23 assistance capital projects.
24 (a) Appropriation.--The amount necessary to pay principal of
25 and interest on all obligations issued to provide funds for
26 redevelopment assistance capital projects [is hereby] shall be
27 appropriated from the General Fund and shall be transferred to
28 the Capital Debt Fund upon authorization by the Governor.
29 (b) Limitation.--The maximum amount of redevelopment
30 assistance capital projects undertaken by the Commonwealth for
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1 which obligations are outstanding shall not exceed, in
2 aggregate, [$1,510,000,000] $2,150,000,000.
3 Section 6. Section 318 of the act is amended to read:
4 Section 318. Funding and administration of redevelopment
5 assistance capital projects.
6 (a) Officers.--The Secretary of the Budget[, in consultation
7 with the Secretary of Community and Economic Development,] shall
8 review and shall approve or disapprove applications for
9 redevelopment assistance capital projects.
10 (b) Time period.--State funding for approved redevelopment
11 assistance capital projects shall be paid over not less than a
12 36-month period unless the Secretary of the Budget authorizes a
13 shorter period.
14 (c) Costs.--Fees for professional services incurred for the
15 design and construction of redevelopment assistance capital
16 projects shall be paid from non-State funds. Land acquisition is
17 a permissible State-funded expenditure if the acquisition cost
18 is supported by an appraisal done by a certified appraiser.
19 (d) Proportion.--Expenditure of State and non-State funds
20 shall be made on a proportional basis for direct land and
21 building acquisition costs and construction expenses.
22 (e) Verification.--Redevelopment assistance capital project
23 cost estimates must be verified by the Office of the Budget or
24 its designated agent before final approval is given to a project
25 application. Cost estimates include total project cost,
26 projected use for State and non-State funds and a year-by-year
27 schedule of costs for the entire project construction phase.
28 (f) Bids.--[The solicitation of a minimum of three written
29 bids is required for all general contracted work in
30 redevelopment assistance capital projects.] Notwithstanding any
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1 other provision of law, the solicitation of a minimum of three
2 written bids for all contracted construction work on
3 redevelopment assistance capital projects shall be the sole
4 requirement for the composition, solicitation, opening and award
5 of bids on such projects. Notwithstanding the foregoing, the
6 construction work shall be performed subject to the act of March
7 3, 1978 (P.L.6, No.3), known as the Steel Products Procurement
8 Act.
9 (g) Review and audit.--Redevelopment assistance capital
10 projects shall be reviewed at regular intervals by the Office of
11 the Budget or its designated agent during the funding phase to
12 ensure financial and program compliance. A final closeout audit
13 shall be performed by the Office of the Budget or its designated
14 agent for all projects.
15 (h) Fee.--To pay for administrative expenses related to
16 redevelopment assistance capital projects funded by Commonwealth
17 general obligation bonds, the Office of the Budget [shall] may
18 charge a fee against proceeds from bonds and notes which were
19 sold to finance construction or acquisition costs of projects.
20 (i) Grant administration.--In the event any applicant does
21 not administer the grant, the applicant shall enter into a
22 cooperation agreement with the entity administering the grant
23 which agreement shall be subject to the approval of the Office
24 of the Budget.
25 Section 7. This act shall take effect immediately.
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