PRIOR PRINTER'S NOS. 606, 853 PRINTER'S NO. 963
No. 10 Session of 2003
INTRODUCED BY BRIGHTBILL, JUBELIRER, PICCOLA, WENGER, THOMPSON,
EARLL, ROBBINS, M. WHITE, KUKOVICH, WONDERLING, D. WHITE,
PILEGGI, CONTI, MADIGAN, COSTA, DENT, LEMMOND, RHOADES,
ARMSTRONG AND RAFFERTY, MARCH 28, 2003
AS AMENDED ON THIRD CONSIDERATION, JUNE 11, 2003
AN ACT
1 Providing for an economic enhancement program in the Department
2 of Community and Economic Development; creating tax incentive
3 districts; establishing the Economic Enhancement Fund and the <--
4 Economic Enhancement Financing Authority; providing for the
5 issuance of bonds and for debt service reserve funds; <--
6 PROVIDING FOR THE FINANCING OF GRANTS AND LOANS; and making
7 an appropriation.
8 TABLE OF CONTENTS <--
9 Chapter 1. General Provisions
10 Section 101. Short title.
11 Section 102. Findings.
12 Section 103. Definitions.
13 Chapter 3. Economic Enhancement Program
14 Section 301. Economic Enhancement Program.
15 Section 302. Tax incentive districts.
16 Section 303. Projects.
17 Section 304. Establishment of Economic Enhancement Fund.
18 Chapter 5. Economic Enhancement Financing Authority
19 Section 501. Authority.
1 Section 502. Board.
2 Section 503. Powers and duties.
3 Chapter 7. Bonds of Authority
4 Section 701. Bonds.
5 Section 702. Exemption from taxation.
6 Section 703. Validity of bonds; limitation on actions.
7 Section 704. Provisions of bonds; trust indentures.
8 Section 705. Remedies of obligee of authority.
9 Section 706. Validity of pledge.
10 Section 707. Commonwealth pledges.
11 Section 708. Resolution and law are contracts with holders
12 of bonds.
13 Section 709. Bonds to be legal investments.
14 Section 710. Right to enforcement of pledge of revenues.
15 Section 711. Funds of authority; source of revenue.
16 Section 712. Debt service reserve fund.
17 Section 713. Other funds and accounts.
18 Section 714. Initial issue of authority bonds.
19 Chapter 51. Miscellaneous Provisions
20 Section 5101. Original jurisdiction of Supreme Court.
21 Section 5102. Construction.
22 Section 5103. Appropriation.
23 Section 5104. Severability.
24 Section 5105. Effective date.
25 The General Assembly of the Commonwealth of Pennsylvania
26 hereby enacts as follows:
27 CHAPTER 1 <--
28 GENERAL PROVISIONS
29 Section 101 1. Short title. <--
30 This act shall be known and may be cited as the Economic
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1 Enhancement Act.
2 Section 102 2. Findings. <--
3 The General Assembly finds and declares as follows:
4 (1) There exist in this Commonwealth areas of economic
5 distress which require coordinated efforts by private and
6 public entities to restore prosperity and to enable these
7 areas to make significant contributions to the economic and
8 social life of this Commonwealth.
9 (2) Long-term economic viability of these areas requires
10 the cooperative involvement of residents, businesses and
11 State and local assistance, and it is in the best interests
12 of this Commonwealth to create incentive zones and to provide
13 grants and loans to persons located in these zones to
14 encourage this long-term economic redevelopment.
15 Section 103 3. Definitions. <--
16 The following words and phrases when used in this act shall
17 having the meaning given to them in this section unless the
18 context clearly indicates otherwise:
19 "Authority." The Economic Enhancement Financing Authority <--
20 established by section 501.
21 "AUTHORITY." THE PENNSYLVANIA ECONOMIC DEVELOPMENT FINANCING <--
22 AUTHORITY ESTABLISHED BY THE ACT OF AUGUST 23, 1967 (P.L.251,
23 NO.102), KNOWN AS THE ECONOMIC DEVELOPMENT FINANCING LAW.
24 "Capital costs." The actual costs of the construction of all
25 of the following:
26 (1) Works or improvements which will become public works
27 or improvements.
28 (2) New buildings, structures or fixtures.
29 (3) The demolition, alteration, remodeling, repair or
30 reconstruction of existing buildings, structures or fixtures.
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1 (4) The acquisition, upgrade or rehabilitation of
2 machinery and equipment.
3 (5) The acquisition, clearing or grading of land.
4 The term includes the actual cost of the construction,
5 rehabilitation or repair of publicly owned infrastructure
6 improvements located outside the boundaries of a tax increment
7 district which are of direct benefit to a project.
8 "Department." The Department of Community and Economic
9 Development of the Commonwealth.
10 "Deteriorated property." A blighted, impoverished area
11 containing residential, industrial, commercial or other real
12 property which is abandoned, unsafe, vacant, undervalued,
13 underutilized, overgrown, defective, condemned or demolished or
14 which contains economically undesirable land use. The term
15 includes all of the following:
16 (1) A tax increment district.
17 (2) Property adjacent to deteriorated property which is
18 significantly undervalued and underutilized due to the
19 proximity of the deteriorated property.
20 "Fund." The Economic Enhancement Fund established by section
21 304 7. <--
22 "Issuing authority." As that term is defined in section 3 of
23 the act of July 11, 1990 (P.L.465, No.113), known as the Tax
24 Increment Financing Act.
25 "Project." The undertakings or activities for the
26 elimination of deteriorated property. The term includes property
27 acquisition, clearance, redevelopment, rehabilitation or
28 conservation.
29 "Project costs." An expenditure made or estimated to be made
30 or any monetary obligation incurred or estimated to be incurred
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1 in connection with a project. Project costs include all of the
2 following:
3 (1) Capital costs.
4 (2) Financing costs.
5 (3) Professional service costs.
6 (4) Administrative costs.
7 (5) Relocation costs.
8 (6) Organizational costs.
9 (7) Any other cost associated with a project.
10 "Qualified project." A project approved by the Department of
11 Community and Economic Development under section 303 6. <--
12 "Tax incentive district." A contiguous geographic area
13 approved by the Department of Community and Economic Development
14 under section 302 5. <--
15 "Tax increment district." As that term is defined in section
16 3 of the act of July 11, 1990 (P.L.465, No.113), known as the
17 Tax Increment Financing Act.
18 CHAPTER 3 <--
19 ECONOMIC ENHANCEMENT PROGRAM
20 Section 301 4. Economic Enhancement Program. <--
21 There is hereby established within the department the
22 Economic Enhancement Program. The Economic Enhancement Program
23 shall be comprised of tax incentive districts approved by the
24 department.
25 Section 302 5. Tax incentive districts. <--
26 (a) Proposal.--The Governor may, by Executive Order,
27 designate deteriorated property in this Commonwealth as a
28 proposed tax incentive district. An Executive Order designating
29 deteriorated property shall specify the time period for which
30 the property is designated not to exceed 20 years. The
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1 department shall immediately notify municipalities located
2 within the area designated.
3 (b) Application.--Within 90 days of receiving notification
4 in accordance with subsection (a), a municipality may apply to
5 the department for approval of the designation of the
6 deteriorated property as a tax incentive district. The
7 application shall be on a form provided by the department and
8 shall include a copy of the ordinance, resolution or other
9 required action from the governing body of the municipality
10 approving the establishment of the tax incentive district. All
11 appropriate ordinances and resolutions shall be binding and
12 nonrevocable on the municipality.
13 (c) Designation.--If all municipalities within a proposed
14 tax incentive district submit timely completed applications, the
15 department shall approve the applications and designate the
16 property as a tax incentive district. Persons owning property
17 located within a tax incentive district and issuing authorities
18 of tax increment districts located within a tax incentive
19 district shall be eligible to receive grants and loans for
20 qualified projects from the Economic Enhancement Financing <--
21 Authority AUTHORITY. <--
22 Section 303 6. Projects. <--
23 (a) Application.--A person may apply to the department for
24 approval of a project. The application shall be on the form and
25 in the manner established by the department and shall include a
26 detailed list of project costs.
27 (b) Review.--The department shall review the application.
28 The department may approve the project if it determines that all
29 of the following apply:
30 (1) The applicant is a person that owns property in a
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1 tax incentive district or is an issuing authority of a tax
2 increment district located within a tax incentive district.
3 (2) The project would be located in a tax incentive
4 district or is located in a tax increment district.
5 (3) The project would do or does any of the following:
6 (i) Create career-oriented net new jobs or preserve
7 jobs.
8 (ii) Increase and diversify the manufacturing base
9 of this Commonwealth.
10 (iii) Aid in the expansion of existing private
11 companies, particularly those that sell their products
12 outside this Commonwealth.
13 (iv) Attract new industries with new products into
14 economically distressed areas within this Commonwealth.
15 (v) Promote industrial, commercial and other
16 economic development within this Commonwealth.
17 (vi) Promote a healthy environment through the
18 abatement, safe storage, transportation, reduction,
19 elimination, remediation and disposal within this
20 Commonwealth of pollutants and wastes.
21 (vii) Otherwise promote the health, welfare and
22 safety of the residents of this Commonwealth by promoting
23 economic activity and efficiency or alleviating or
24 eliminating unemployment, blight and other unhealthy
25 conditions.
26 (c) Notice.--The department shall notify the authority of
27 projects which have been approved by the department and which
28 are eligible for financial assistance by the authority.
29 Section 304 7. Establishment of Economic Enhancement Fund. <--
30 (a) Establishment.--There is hereby established a special
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1 fund known as the Economic Enhancement Fund. Interest income
2 derived from investment of the money in the fund shall be
3 credited by the Treasury Department to the fund.
4 (b) Calculation.--Within 30 days of the end of each quarter,
5 the Department of Revenue shall calculate and notify the
6 Secretary of the Budget of the aggregate revenue received by the
7 Commonwealth pursuant to Articles II, IV and VI of the act of
8 March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of
9 1971, from taxpayers located within tax incentive districts.
10 (c) Transfer.--Within ten days of receiving notification in
11 accordance with subsection (b), the Secretary of the Budget
12 shall direct the State Treasurer to transfer the sum equal to
13 25% of the aggregate revenue received by the Commonwealth
14 pursuant to Articles II, IV and VI of the Tax Reform Code of
15 1971, from taxpayers located within tax incentive districts,
16 from the General Fund to the fund.
17 (d) Appropriation and payments.--Moneys in the fund are
18 hereby appropriated on a continuing basis to the authority. The
19 State Treasurer shall provide semiannual payments to the
20 authority on August 1 and February 1 of each year until the
21 authority is terminated in accordance with section 501. August 1 <--
22 payments shall be equal to the balance of the fund on July 15 of
23 that calendar year, and February 1 payments shall be equal to
24 the balance of the fund on January 15 of that calendar year.
25 CHAPTER 5 <--
26 ECONOMIC ENHANCEMENT FINANCING AUTHORITY
27 Section 501. Authority.
28 (a) Establishment.--There is hereby established an authority
29 to be known as the Economic Enhancement Financing Authority. The
30 authority shall be a body corporate and politic and shall assist
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1 persons in funding economic development in tax incentive
2 districts.
3 (b) Governance.--The powers and duties of the authority
4 shall be exercised by a board.
5 (c) Revenues.--Expenses of the authority shall be paid from
6 revenues derived from investment income of the authority and
7 from money appropriated to the authority in accordance with
8 section 304. The funds appropriated to the authority in section
9 5103 shall be repaid by the authority from the proceeds of the
10 initial issue of bonds by the authority. The Commonwealth shall
11 not be responsible for funding the annual budget of the
12 authority.
13 (d) Fiscal year.--The fiscal year of the authority shall be
14 the same as the fiscal year of the Commonwealth.
15 (e) Audit.--The authority shall conduct an independent audit
16 of its accounts and records annually.
17 (f) General Assembly review.--
18 (1) The chairperson and minority chairperson of the
19 Appropriations Committee of the Senate and the chairperson
20 and minority chairperson of the Appropriations Committee of
21 the House of Representatives shall have the right at any time
22 to examine the books, accounts and records of the authority.
23 (2) The authority shall file an annual report with the
24 chairperson and the minority chairperson of the
25 Appropriations Committee of the Senate and the chairperson
26 and the minority chairperson of the Appropriations Committee
27 of the House of Representatives. The report shall include all
28 of the following:
29 (i) A copy of the authority's budget.
30 (ii) The total amount of debt service to become due
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1 on authority bonds for the ensuing fiscal year, including
2 payments of interest and principal, maturity value or
3 sinking fund payments.
4 (iii) The amount, if any, due to any provider of any
5 credit or liquidity facility representing payments made
6 by the provider as provided in the applicable resolution
7 or trust indenture as a result of any previous failure of
8 the authority to make any payment provided for in the
9 applicable resolution or trust indenture, including any
10 related reasonable interest, fees or charges.
11 (iv) The amount, if any, required to restore the
12 debt service reserve fund to the level required under
13 section 713 and the resolution of the authority
14 establishing the fund.
15 (v) The amount, if any, required to be rebated to
16 the United States to provide for continued Federal tax
17 exemption for bonds of the authority.
18 (f) Publication.--The authority shall annually publish a
19 concise financial statement in the Pennsylvania Bulletin.
20 (g) Limitation on bankruptcy filing.--Notwithstanding any
21 other provision of law, the authority shall not be authorized to
22 file a petition for relief under 11 U.S.C. Ch. 9 (relating to
23 bankruptcy) or any successor Federal bankruptcy law if the
24 authority has outstanding bonds issued pursuant to this act.
25 (h) Termination.--The authority shall terminate one year
26 after all of its liabilities have been fully paid and
27 discharged. Upon the termination, all of its rights and
28 properties, including funds remaining in the debt service
29 reserve fund, shall be paid to the Commonwealth.
30 Section 502. Board.
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1 (a) Composition.--The board of the authority shall be
2 composed of the following five members:
3 (1) The Secretary of the Budget.
4 (2) The Secretary of the Department of Revenue.
5 (3) The Secretary of the Department of Community and
6 Economic Development.
7 (4) Two members of the public with experience in finance
8 or management appointed by the Governor.
9 (b) Term.--The members of the board appointed by the
10 Governor shall serve for a term of three years.
11 (c) Organization.--The members of the board shall elect from
12 among themselves a chairperson, vice chairperson, secretary,
13 treasurer and such other officers as they may determine. A
14 member may hold more than one office of the board at any time.
15 (d) Meetings.--The board shall meet at the call of the
16 chairperson but at least once during each quarter of the fiscal
17 year.
18 (e) Expenses.--A member shall not receive compensation or
19 remuneration, but shall be entitled to reimbursement for all
20 reasonable and necessary actual expenses.
21 (f) Public officials and party officers.--The members of the
22 board appointed by the Governor shall not seek or hold a
23 position as any other public official within this Commonwealth
24 or as a party officer while being a member of the board of the
25 authority.
26 (g) Liability.--Members of the board shall not be liable
27 personally on any obligations of the authority, including,
28 without limitation, bonds of the authority and shall be immune
29 from suit.
30 (h) Applicability.--The provisions of the following acts
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1 shall apply to the authority:
2 (1) The act of June 21, 1957 (P.L.390, No.212), referred
3 to as the Right-to-Know Law.
4 (2) The act of July 19, 1957 (P.L.1017, No.451), known
5 as the State Adverse Interest Act.
6 (3) The provisions of 65 Pa.C.S. Chs. 7 (relating to
7 open meetings) and 11 (relating to ethic standards and
8 financial disclosure).
9 Section 503. Powers and duties.
10 (a) Powers.--The authority, through action of the board,
11 shall have all of the following powers:
12 (1) The power to adopt bylaws, guidelines and
13 regulations as it deems necessary.
14 (2) The power to contract and to execute instruments,
15 including guarantees, sureties, mortgages and contracts of
16 insurance, necessary or convenient for the carrying on of its
17 business.
18 (3) The power to sue and be sued, implead and be
19 impleaded, complain and defend in court.
20 (4) The power to borrow money, incur debt and, in
21 anticipation of the receipt of income of the authority, make,
22 issue and secure bonds or notes.
23 (5) The power to acquire, accept, purchase, receive,
24 hold and invest funds and property, tangible or intangible,
25 from all available sources, directly or by assignment, pledge
26 or otherwise.
27 (6) The power to sell, transfer, convey and dispose of
28 any property, tangible or intangible.
29 (7) The power to adopt, use and alter at will a
30 corporate seal.
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1 (8) The power to employ such persons as are necessary or
2 convenient for the carrying on of its business.
3 (9) The power to retain counsel and auditors to render
4 such professional services as the authority deems
5 appropriate.
6 (10) The power to pledge the credit of the authority and
7 to provide such security and liquidity as may be required by
8 creditors.
9 (11) The power to cooperate with any Federal agency or
10 government agency.
11 (12) Any other power necessary or convenient for the
12 promotion or general welfare of the authority.
13 (b) Duties.--The authority shall provide financial
14 assistance to persons for qualified projects. The financial
15 assistance shall be in the form of loans or multiyear grants and
16 may include proceeds from the sale of bonds. If the financial
17 assistance provided to a person is from the proceeds of a bond
18 issuance, the board shall require the person to be a surety of
19 the bonds. The board may impose such other terms and conditions
20 on the financial assistance authorized by this subsection as the
21 board determines is in the best interests of the authority.
22 (c) Limitations.--
23 (1) In accordance with section 8 of Article VIII of the
24 Constitution of Pennsylvania, the board and the authority
25 shall have no power to pledge the credit or taxing powers of
26 the Commonwealth, nor shall any of the bonds of the authority
27 be deemed a debt or liability of the Commonwealth.
28 (2) The authority shall be solely liable for the payment
29 of the principal, interest or premium on any bonds issued by
30 the authority. The Commonwealth shall have no legal or moral
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1 obligation for the payment of any expenses or obligations of
2 the authority, including bond principal and interest, the
3 funding or refunding of any reserves and any administrative
4 or operating expenses whatsoever, other than for the advance
5 of funds for initial operating expenses of the authority
6 contained in section 701 to be repaid by the authority as
7 provided in this act. Bonds issued by the authority shall
8 contain a prominent statement of the limitation set forth in
9 this subsection and shall further recite that obligees of the
10 authority shall have no recourse, either legal or moral, to
11 the Commonwealth for payment of the bonds of the authority.
12 CHAPTER 7
13 BONDS OF AUTHORITY
14 Section 701. Bonds.
15 (a) Authorization.--Bonds of the authority shall be
16 authorized by a resolution of the board and shall be of a
17 series, bear such date or dates and bear or accrue interest at
18 the rate or rates determined by the board to be necessary to
19 issue and sell the authorized bonds. The bonds shall be in the
20 denominations; be in the form, either coupon or fully registered
21 without coupons or in certificated or book-entry-only form;
22 carry such registration, exchangeability and interchangeability
23 privileges; be payable in the medium of payment and at such
24 place or places; be subject to the terms of redemption and be
25 entitled to the priorities of payment in the revenues or
26 receipts of the authority as the resolution of the board
27 provides. Bonds shall be signed by or shall bear the facsimile
28 signature of the officer designated by the board. Interest
29 coupons shall be attached to coupon bonds and shall bear the
30 facsimile signature of the treasurer of the authority. Bonds
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1 shall be authenticated by an authenticating agent, fiscal agent
2 or trustee. Bonds may be issued and delivered notwithstanding
3 that the officer signing the bonds or the treasurer whose
4 facsimile signature is on a coupon shall have ceased to be the
5 officer at the time when the bond is actually delivered.
6 (b) Maturity date.--
7 (1) Bonds issued to provide financial assistance to
8 persons shall mature at such time or times not exceeding ten
9 years from their respective dates of original issue.
10 (2) Bonds issued to finance the costs of a capital
11 project shall mature at such time or times not exceeding the
12 weighted average useful life of the projects being financed
13 and in no event exceeding 30 years from their respective
14 dates of original issue.
15 (3) Bonds issued in anticipation of income of the
16 authority shall mature within the fiscal year of the date of
17 issuance thereof, except for bonds issued in anticipation of
18 grants from the Commonwealth, a government agency or Federal
19 agency, which bonds shall mature no later than the time of
20 anticipated receipt of such grant.
21 (c) Sale.--Bonds may be sold at public sale or invited sale
22 for the price or prices and at the rate or rates of interest as
23 the authority determines. Bonds may be sold at private sale by
24 negotiation at the price or prices and at the rate or rates of
25 interest as the authority determines, but only if the authority
26 makes a written public explanation of the circumstances and
27 justification for the private sale by negotiation. Pending the
28 preparation of the definitive bonds, interim receipts may be
29 issued to the purchaser or purchasers of the bonds and shall
30 contain the terms and conditions established by the authority.
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1 (d) Negotiable instruments.--Bonds of the authority shall
2 have the qualities of negotiable instruments under 13 Pa.C.S.
3 (relating to Commercial Code).
4 (e) Use of proceeds.--The proceeds of an issue of bonds may
5 be used to pay the costs of issuance of the bonds, to pay costs
6 of administration of authority, to fund reserves for the bonds,
7 to capitalize interest on the bonds for a period not to exceed
8 12 months, to pay the costs of capital projects in areas
9 designated by the Governor under Chapter 3, to reimburse the
10 Commonwealth for the appropriation made in section 5103 and to
11 fund up to $500,000 of initial operating expenses of the
12 authority.
13 (f) Refunding.--Subject to the provisions of this act and
14 bonds, notes or other obligations issued in accordance with this
15 act, the authority may refund any outstanding debt of the
16 authority, whether the debt represents principal or interest, in
17 whole or in part, at any time. The term of any bonds issued for
18 refunding purposes shall not extend to a maturity date which
19 could not have been included in the original issue of bonds
20 being refunded. For the purposes of this subsection, the term
21 "refund" and its variations shall mean the issuance and sale of
22 obligations the proceeds of which are used or are to be used for
23 the payment or redemption of outstanding obligations upon or
24 prior to maturity.
25 Section 702. Exemption from taxation.
26 The effectuation of the authorized purposes of the authority
27 shall and will be in all respects for the benefit of the people
28 of this Commonwealth, for the increase of their commerce and
29 prosperity and for the improvements of their health, safety,
30 welfare and living conditions; and, since the authority will be
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1 performing such essential governmental functions in effectuating
2 such purposes, the authority shall not be required to pay any
3 taxes or assessments upon any property acquired or used or
4 permitted to be used by the authority for its purposes; and the
5 bonds issued by the authority, their transfer and the income
6 therefrom, including any profits made on the sale thereon,
7 shall, at all times, be free from State and local taxation
8 within this Commonwealth. This exemption shall not extend to
9 gift, estate, succession or inheritance taxes or any other taxes
10 not levied directly on the bonds, the transfer thereof, the
11 income therefrom or the realization of profits on the sale
12 thereof.
13 Section 703. Validity of bonds; limitation on actions.
14 (a) Presumption.--A bond reciting in substance that it has
15 been issued by the authority to accomplish the public purposes
16 of this act shall be conclusively deemed in any suit, action or
17 proceeding involving the validity or enforceability of the bonds
18 or security therefor to have been issued for the purposes.
19 (b) Filing.--The authority shall file a copy of a resolution
20 authorizing the issuance of bonds in its office for public
21 inspection and shall publish in three newspapers of general
22 circulation in this Commonwealth a notice stating:
23 (1) The fact and date of such adoption.
24 (2) The places where such resolution has been so filed
25 for public inspection.
26 (3) The date of publication of such notice.
27 (4) That any action or proceeding of any kind or nature
28 in any court questioning the validity or proper authorization
29 of bonds provided for by the resolution, or the validity of
30 any covenants, agreements or contract provided for by such
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1 resolution, shall be commenced within ten days after the
2 publication of such notice.
3 After publication of the notice, if no action or proceeding
4 questioning the validity or proper authorization of bonds
5 provided for by the resolution referred to in the notice, or the
6 validity of any covenants, agreements or contracts provided by
7 the resolution shall be commenced within ten days after the
8 publication of the notice, then all residents of this
9 Commonwealth and all other persons whatsoever shall be forever
10 barred and foreclosed from instituting or commencing any action
11 or proceeding in any court, or pleading any defense to any
12 action or proceedings, questioning the validity or proper
13 authorization of the bonds or the validity of the covenants,
14 agreements or contracts, and the bonds, covenants, agreements
15 and contracts shall be conclusively deemed to be valid and
16 binding obligations in accordance with their terms and tenor.
17 (c) Estoppel.--After issuance of bonds, bonds shall be
18 conclusively presumed to be fully authorized and issued by all
19 the laws of this Commonwealth, and any person shall be estopped
20 from questioning their sale, execution or delivery by the
21 authority.
22 Section 704. Provisions of bonds; trust indentures.
23 In connection with the issuance of bonds and in order to
24 secure the payment of its bonds, the authority, in addition to
25 its other powers, shall have the power to do all of the
26 following:
27 (1) Pledge or grant a security interest in all or any
28 part of its gross or net revenues to which its right then
29 exists or which may thereafter come into existence.
30 (2) Grant a security interest in all or any part of its
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1 personal property then owned or thereafter acquired.
2 (3) Covenant against pledging or granting a security
3 interest in all or any part of its revenues or all or any
4 part of its personal property to which its right or title
5 exists or may thereafter come into existence, or against
6 permitting or suffering any lien on its revenues or property;
7 covenant with respect to limitations on its right to sell,
8 lease or otherwise dispose of any of its real property; and
9 covenant as to which other or additional debts or obligations
10 may be incurred by it.
11 (4) Covenant as to the bonds to be issued and as to the
12 issuance of the bonds, in escrow or otherwise, and as to the
13 use and disposition of the proceeds thereof; provide for the
14 replacement of lost, destroyed or mutilated bonds; covenant
15 against extending the time for the payment of bonds or
16 interest thereon; redeem the bonds, and covenant for their
17 redemption and provide the terms and conditions thereof.
18 (5) Covenant as to the amount of revenues to be received
19 in each fiscal year or other period of time by the authority,
20 as well as to the use and disposition to be made thereof,
21 create or authorize the creation of special funds or reserves
22 for debt service or other purposes and covenant as to the use
23 and disposition of the moneys held in such funds.
24 (6) Prescribe the procedure, if any, by which the terms
25 of any contract with bondholders may be amended or abrogated,
26 and the amount of bonds the holders of which must consent
27 thereto, and the manner in which the consent may be given.
28 (7) Covenant as to the use of any or all of its real or
29 personal property, to warrant its title, and covenant as to
30 the maintenance of its real and personal property, the
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1 replacement thereof, the insurance to be carried thereon and
2 the use and disposition of insurance proceeds.
3 (8) Covenant as to the rights, liabilities, powers and
4 duties arising upon the breach by it of any covenant,
5 condition or obligation, provided that the authority shall
6 not be permitted to covenant that, upon a breach, any or all
7 of its bonds shall become or may be declared due before
8 stated maturity.
9 (9) Vest in a trustee or the holders of bonds, or any
10 proportion of them, the right to enforce the payment of the
11 bonds or any covenants securing or relating to the bonds;
12 vest in a trustee the right, in the event of default in
13 payments of interest or on principal of bonds by the
14 authority, to take possession and use, operate and manage any
15 real or personal property and to collect the revenues and
16 receipts of an authority and to dispose of such moneys in
17 accordance with the agreement of the authority with the
18 trustee; provide for the powers and duties of a trustee and
19 to limit liabilities thereof; and provide the terms and
20 conditions upon which a trustee or the holders of bonds, or
21 any proportion of them, may enforce any covenant or rights
22 securing or relating to the bonds.
23 (10) Enter into interest rate exchange agreements,
24 interest rate cap and floor agreements and other similar
25 agreements which in the judgment of the authority will assist
26 the authority in managing the interest costs of the
27 authority.
28 (11) Obtain letters of credit, bonds insurance and other
29 facilities for credit enhancement and liquidity.
30 (12) Exercise all or any part or combination of the
20030S0010B0963 - 20 -
1 powers granted in this act, make covenants other than and in
2 addition to the covenants expressly authorized by this act,
3 make such covenants and do any and all such acts and things
4 as may be necessary or convenient or desirable in order to
5 secure its bonds or, in the absolute discretion of the
6 authority, as will tend to accomplish the purposes of this
7 act by making the bonds more marketable, notwithstanding that
8 such covenants, acts or things may not be specifically
9 enumerated by this act.
10 Notwithstanding any provision of this act to the contrary, the
11 real property of the authority shall not be mortgaged and shall
12 not be subject to attachment nor levied upon by execution or
13 otherwise. The revenues of the authority and the personal
14 property of the authority shall be pledged or otherwise
15 encumbered only as expressly provided in this section and,
16 except to the extent necessary to effectuate the pledge or
17 encumbrance, shall not be subject to attachment nor levied upon
18 by execution or otherwise.
19 Section 705. Remedies of obligee of authority.
20 In addition to all other rights which may be conferred on the
21 obligee subject only to any contractual restrictions binding
22 upon the obligee, an obligee of the authority shall have all of
23 the following rights:
24 (1) To compel, by mandamus, suit, action or proceeding
25 at law or in equity, the authority and the members of its
26 governing board, officers, agents or employees thereof to
27 perform each and every term, provision and covenant contained
28 in any bond or contract of the authority with or for the
29 benefit of such obligee and to require the carrying out of
30 any or all such covenants and agreements of the authority and
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1 the fulfillment of all duties imposed upon the authority by
2 this act.
3 (2) To obtain, by proceeding in equity, an injunction
4 against any acts or things which may be unlawful or the
5 violation of any of the rights of such obligee of the
6 authority.
7 (3) To require the authority to account as if it were
8 the trustee of an express trust for the obligees of the
9 authority for any pledged revenues received.
10 Section 706. Validity of pledge.
11 Any pledge of or grant of a security interest in revenues of
12 the authority or personal property of an authority made by the
13 authority shall be valid and binding from the time when the
14 pledge is made. The revenues or other property pledged and
15 thereafter received by the authority shall immediately be
16 subject to the lien of the pledge or security interest without
17 any physical delivery thereof or further act. The lien of the
18 pledge or security interest shall be valid and binding as
19 against all parties having claims of any kind in tort, contract
20 or otherwise against the authority irrespective of whether such
21 parties have notice thereof. Neither the resolution nor any
22 other instrument of the authority by which a pledge or security
23 interest is created need be recorded or filed to perfect the
24 pledge or security interest.
25 Section 707. Commonwealth pledges.
26 (a) Bondholders.--The Commonwealth does hereby pledge to and
27 agree with each and every obligee of the authority that the
28 Commonwealth will not limit or alter the rights hereby vested in
29 the authority in any manner inconsistent with the obligations of
30 the authority to its obligees until all bonds at any time
20030S0010B0963 - 22 -
1 issued, together with the interest thereon, are fully paid and
2 discharged.
3 (b) Lessees.--The Commonwealth does hereby pledge to and
4 agree with any person who, as owner thereof, leases or subleases
5 property to or from the authority that the Commonwealth will not
6 limit or alter the rights and powers hereby vested in the
7 authority or otherwise created by this act in any manner which
8 impairs the obligations of the authority until all such
9 obligations of the authority under the lease or sublease are
10 fully met and discharged.
11 Section 708. Resolution and law are contracts with holders of
12 bonds.
13 Except as otherwise provided in any resolution of the
14 authority authorizing or awarding bonds, the terms of a
15 resolution and any agreement authorized by the resolution and
16 the terms of this act as in effect when the bonds were
17 authorized shall constitute a contract between the authority and
18 the obligees, subject to modification by the vote by holders of
19 the percentage of bonds as the resolution authorizing or
20 awarding the bonds provides.
21 Section 709. Bonds to be legal investments.
22 Bonds issued pursuant to this act are hereby made securities
23 in which all government agencies, all insurance companies, trust
24 companies, banking associations, banking corporations, savings
25 banks, investment companies, executors, the trustees of any
26 retirement, pension or annuity fund or system of the
27 Commonwealth, trustees and other fiduciaries may properly and
28 legally invest funds, including capital, deposits or other funds
29 in their control or belonging to them. The bonds are hereby made
30 securities which may properly and legally be deposited with and
20030S0010B0963 - 23 -
1 received by any government agency for any purpose for which the
2 deposit of bonds or other obligations of the Commonwealth now or
3 may hereafter be authorized by law.
4 Section 710. Right to enforcement of pledge of revenues.
5 The obligees of the authority shall have the right to enforce
6 a pledge of or security interest in revenues of the authority
7 securing payment of bonds of the authority against all
8 government agencies in possession of any such revenues at any
9 time, which revenues may be collected directly from such
10 officials upon notice by the obligees or a trustee for the
11 obligees for application to the payment of the bonds as and when
12 due or for deposits in any sinking, bond or debt service fund
13 established by this act or established by resolution of the
14 authority with the trustee at the times and in the amounts
15 specified in the bonds or the resolution or indenture or trust
16 agreement securing the bonds. Any government agency in
17 possession of any such revenues shall make payment against
18 receipt and shall thereby be discharged from any further
19 liability or responsibility for such revenues. If payment is
20 made to a holder of bonds, it shall be made against surrender of
21 the bonds to the payor for delivery to the authority in the case
22 of payment in full; otherwise, it shall be made against
23 production of the bonds for notation thereon of the amount of
24 the payment. The provisions of this section with respect to the
25 enforceability and collection of revenues which secure bonds
26 shall supersede any contrary or inconsistent statutory provision
27 or rule of law. This section shall be construed and applied to
28 fulfill the legislative purpose of clarifying and facilitating
29 the financing of the authority by assuring to the obligees of
30 the authority the full and immediate benefit of the security for
20030S0010B0963 - 24 -
1 the bonds without delay, diminution or interference based on any
2 statute, decision, ordinance or administrative rule or practice.
3 Section 711. Funds of authority; source of revenue.
4 (a) Receipt by treasurer.--All funds of the authority
5 received from any source shall be delivered to or upon the order
6 of the treasurer of the authority or to such other agent of the
7 authority as the board may designate. Funds received by the
8 authority shall be promptly deposited in a bank or banks in this
9 Commonwealth chosen by the board. The moneys in the accounts of
10 the authority may be paid by the treasurer of the authority or
11 other designated agent of the authority on warrant of the
12 treasurer of the authority. All deposits of moneys may, if
13 required by the authority, be secured by obligations of the
14 United States or of the Commonwealth of a market value equal at
15 all times to the amount of the deposit, and all banks and trust
16 companies are authorized to give security for such deposits,
17 provided that no moneys deposited in a debt service reserve fund
18 may be secured by a deposit of obligations issued by or
19 obligations guaranteed by an assisted city.
20 (b) Investment of funds.--Subject to the provisions of any
21 agreements with obligees of the authority, all funds of the
22 authority, including the proceeds of bonds, which are not
23 required for immediate use may be invested in obligations of the
24 Federal Government or of the Commonwealth or obligations which
25 are legal investments for Commonwealth funds.
26 Section 712. Debt service reserve fund.
27 (a) Authorization.--The authority may establish one or more
28 debt service reserve funds into which it shall deposit:
29 (1) Proceeds from the sale of bonds, to the extent
30 provided in the resolution or resolutions authorizing the
20030S0010B0963 - 25 -
1 bonds.
2 (2) Any other moneys made available to the authority
3 from any source.
4 All moneys held in any debt service reserve fund, except as
5 provided hereafter, shall be used when required solely for the
6 payment of the principal of bonds secured in whole or in part by
7 the fund or of the sinking fund payments, if any, with respect
8 to the bonds, the purchase or redemption of the bonds, the
9 payment of interest on the bonds or the payment of any
10 redemption premium required to be paid when the bonds and notes
11 are redeemed prior to maturity. Any debt service reserve fund
12 established pursuant to this section shall be a trust fund held
13 for the benefit and security of the obligees of the authority
14 whose bonds are secured by the fund. Moneys in a debt service
15 reserve fund shall not be withdrawn from the fund at any time in
16 an amount that would reduce the amount of the fund to less than
17 the minimum reserve fund requirement established for the fund in
18 the resolution of the authority creating the fund, except for
19 withdrawals for the purpose of making payments when due of
20 principal, interest, redemption premiums and sinking fund
21 payments, if any, with respect to the bonds for the payment of
22 which other moneys of the authority are not available. Any
23 income or interest earned by or increments to any debt service
24 reserve fund due to the investment thereof may be transferred by
25 the authority to other funds or accounts of the authority to the
26 extent the transfer does not reduce the amount of the debt
27 service reserve fund below the minimum reserve fund requirement
28 established for that fund. Funds transferred to other accounts
29 in accordance with the preceding requirements may be used for
30 whatever purposes the authority deems appropriate so long as the
20030S0010B0963 - 26 -
1 purposes are consistent with this act and the contracts of the
2 authority with obligees of the authority and with assisted
3 cities.
4 (b) Bond limitation.--The authority shall not at any time
5 issue bonds secured in whole or in part by a debt service
6 reserve fund if issuance of the bonds would cause the amount in
7 the debt reserve fund to fall below the minimum reserve
8 requirement for the fund, unless the authority at the time of
9 issuance of the bonds deposits in the fund an amount, from the
10 proceeds of the bonds to be issued or from other sources, which
11 when added to the amount already in the fund will cause the
12 total amount on deposit in the fund to equal or exceed the
13 minimum reserve fund requirement.
14 (c) Definition.--For the purposes of this section, the term
15 "minimum reserve fund requirement" shall mean that amount
16 defined as the minimum reserve fund requirement in the
17 resolution or resolutions of the authority authorizing the
18 bonds.
19 Section 713. Other funds and accounts.
20 (a) Authorization.--The authority shall create funds and
21 accounts as may be necessary or desirable for its corporate
22 purposes and shall pay into each fund or account any moneys of
23 the authority available for such purposes or any moneys made
24 available by any other person for the purposes of the fund or
25 account. No other provision of this act shall be construed to
26 prohibit the authority from creating within any fund one or more
27 accounts which may be used or pledged by the authority for a
28 special purpose.
29 (b) Use of fund money.--Any moneys deposited in any fund
30 created by the authority to be used to pay debt service,
20030S0010B0963 - 27 -
1 including, without limitation, the bond payment account, any
2 sinking fund or debt service reserve fund and all investments
3 and proceeds of investments thereof shall, without further
4 action or filing, be subjected to a perfected security interest
5 for the obligees of the authority for whom the fund is held
6 until the moneys or investments shall be properly disbursed in
7 accordance with this act and with the terms of the contract of
8 the authority with its obligees.
9 SECTION 8. FINANCIAL ASSISTANCE. <--
10 THE AUTHORITY SHALL PROVIDE FINANCIAL ASSISTANCE TO PERSONS
11 FOR QUALIFIED PROJECTS. THE FINANCIAL ASSISTANCE SHALL BE IN THE
12 FORM OF LOANS OR SINGLE-YEAR OR MULTIYEAR GRANTS AND MAY INCLUDE
13 PROCEEDS FROM THE SALE OF BONDS. PRIOR TO PROVIDING FINANCIAL
14 ASSISTANCE TO A PERSON, THE AUTHORITY SHALL ENTER INTO A
15 CONTRACT WITH THE PERSON. THE CONTRACT SHALL INCLUDE A PROVISION
16 REQUIRING THE PERSON TO REPAY THE GRANT OR LOAN FROM ANY
17 PROCEEDS RESULTING FROM A SALE OR PARTIAL SALE OF THE PROJECT BY
18 THE APPLICANT IN ACCORDANCE WITH THE FOLLOWING:
19 (1) IF THE PROJECT IS SOLD LESS THAN TWO YEARS AFTER
20 RECEIPT OF THE GRANT OR LOAN, THE PERSON SHALL PAY TO THE
21 AUTHORITY 90% OF THE GRANT OR LOAN RECEIVED.
22 (2) IF THE PROJECT IS SOLD TWO OR MORE YEARS BUT LESS
23 THAN FOUR YEARS AFTER RECEIPT OF THE GRANT OR LOAN, THE
24 PERSON SHALL PAY TO THE AUTHORITY 80% OF THE GRANT OR LOAN
25 RECEIVED.
26 (3) IF THE PROJECT IS SOLD FOUR OR MORE YEARS BUT LESS
27 THAN SIX YEARS AFTER RECEIPT OF THE GRANT OR LOAN, THE PERSON
28 SHALL PAY TO THE AUTHORITY 70% OF THE GRANT OR LOAN RECEIVED.
29 (4) IF THE PROJECT IS SOLD SIX OR MORE YEARS BUT LESS
30 THAN EIGHT YEARS AFTER RECEIPT OF THE GRANT OR LOAN, THE
20030S0010B0963 - 28 -
1 PERSON SHALL PAY TO THE AUTHORITY 60% OF THE GRANT OR LOAN
2 RECEIVED.
3 (5) IF THE PROJECT IS SOLD EIGHT OR MORE YEARS BUT LESS
4 THAN TEN YEARS AFTER RECEIPT OF THE GRANT OR LOAN, THE PERSON
5 SHALL PAY TO THE AUTHORITY 50% OF THE GRANT OR LOAN RECEIVED.
6 THE AUTHORITY MAY IMPOSE ANY OTHER TERMS AND CONDITIONS ON THE
7 FINANCIAL ASSISTANCE AS THE BOARD DETERMINES IS IN THE BEST
8 INTERESTS OF THE AUTHORITY.
9 Section 714 9. Initial issue of authority bonds. <--
10 The first series of bonds to be issued by the authority FOR <--
11 LOANS OR GRANTS AUTHORIZED IN ACCORDANCE WITH THIS ACT shall be
12 issued in a manner and at a time so that the net proceeds of the
13 bonds shall be available on or before June 30, 2003 2004, or as <--
14 soon as practicable thereafter.
15 CHAPTER 51 <--
16 MISCELLANEOUS PROVISIONS
17 Section 5101. Original jurisdiction of Supreme Court.
18 The Pennsylvania Supreme Court shall have exclusive
19 jurisdiction to hear any challenge to or to render a declaratory
20 judgment concerning the constitutionality of this act, the
21 contractual rights of the parties relating to bonds issued under
22 this act or any action of the authority in issuing or attempting
23 to issue bonds.
24 Section 5102 20. Construction. <--
25 The provisions of this act providing for security for and
26 rights and remedies of obligees of the authority shall be
27 liberally construed to achieve the purposes stated and provided
28 for in this act.
29 Section 5103 21. Appropriation. <--
30 The sum of $500,000 is hereby appropriated to the Economic <--
20030S0010B0963 - 29 -
1 Enhancement Financing Authority AUTHORITY from the General Fund. <--
2 The appropriation in this section is an advance which shall be
3 repaid by the authority from sources described in section 501(c) <--
4 THE FIRST ISSUE OF BONDS USED TO FINANCE GRANTS AND LOANS UNDER <--
5 THIS ACT as soon as is practicable and in no event later than
6 June 30, 2004.
7 Section 5104. Severability. <--
8 The provisions of this act are severable. If any provision of
9 this act is judged to be invalid by a court of competent
10 jurisdiction, the order or judgment shall be confined in its
11 operation to the controversy in which it was rendered and shall
12 not affect or invalidate the remainder of any provisions.
13 Section 5105. Effective date.
14 This act shall take effect July 1, 2003.
15 SECTION 22. SEVERABILITY. <--
16 THE PROVISIONS OF THIS ACT ARE SEVERABLE. IF ANY PROVISION OF
17 THIS ACT OR ITS APPLICATION TO ANY PERSON OR CIRCUMSTANCE IS
18 HELD INVALID, THE INVALIDITY SHALL NOT AFFECT OTHER PROVISIONS
19 OR APPLICATIONS OF THIS ACT WHICH CAN BE GIVEN EFFECT WITHOUT
20 THE INVALID PROVISION OR APPLICATION.
21 SECTION 23. EFFECTIVE DATE.
22 THIS ACT SHALL TAKE EFFECT JULY 1, 2003, OR IMMEDIATELY,
23 WHICHEVER IS LATER.
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