AN ACT

 

<-1Amending Titles 12 (Commerce and Trade) and 64 (Public
2Authorities and Quasi-Public Corporations) of the
3Pennsylvania Consolidated Statutes, further providing for
4revolving loan program accounts; repealing First Industries
5Program and Second Stage Loan Program; providing for
6Pennsylvania Business Development Authority; imposing duties
7on the Department of Community and Economic Development;
8providing for First Industries Program, for Second Stage Loan
9Program and for transfer from Commonwealth Financing
10Authority to Pennsylvania Business Development Authority for
11First Industries Program and Second Stage Program; and making
12related repeals.

<-13Amending Titles 12 (Commerce and Trade) and 64 (Public 
14Authorities and Quasi-Public Corporations) of the 
15Pennsylvania Consolidated Statutes, in economic development 
16financing strategy, further providing for definitions; in 
17small business first, further providing for definitions, for 
18fund and accounts, for department responsibilities, for 
19capital development loans, for EDA loans, for loans in 
20distressed communities, for pollution prevention assistance 
21loans, and for export financing loans; providing for 
22delegation; and further providing for reporting and 
23inspection; in machinery and equipment loans, further 
24providing for definitions, for establishment, for eligibility
 

1for loans and terms and conditions, for application and 
2administration, for powers of secretary, for reporting and 
3inspection, for nondiscrimination, for conflict of interest, 
4for reports to General Assembly and for guidelines; providing 
5for the Pennsylvania Industrial Development Program; in 
6Pennsylvania Industrial Development Authority, providing for 
7general provisions, for Pennsylvania Industrial Development 
8Program and transfer of loans; repealing certain provisions 
9of the Pennsylvania Industrial Development Authority Act; and 
10making editorial changes.

11The General Assembly of the Commonwealth of Pennsylvania
12hereby enacts as follows:

<-13Section 1. Chapters 23 and 29 of Title 12 of the 
14Pennsylvania Consolidated Statutes are repealed:

15[CHAPTER 23

16SMALL BUSINESS FIRST

17Sec.

182301. Scope.

192302. Definitions.

202303. Establishment.

212304. Fund and accounts.

222305. Department responsibilities.

232306. Capital development loans.

242307. EDA loans.

252308. Loans in distressed communities.

262309. Pollution prevention assistance loans.

272310. Export financing loans.

282311. Reporting and inspection.

292312. Limitations.

30§ 2301. Scope.

31This chapter relates to the Small Business First Program.

32§ 2302. Definitions.

33The following words and phrases when used in this chapter
34shall have the meanings given to them in this section unless the

1context clearly indicates otherwise:

2"Agricultural processor." A person that adds value by
3subjecting one or more farm commodities to a process of
4manufacture, development or preparation for sale or a person
5that converts a farm product into a marketable form.

6"Agricultural producer." A person involved in the management
7and use of a normal agricultural operation for the production of
8a farm commodity.

9"Apparel products." Products manufactured, woven, cut, sewn
10or otherwise similarly processed by mechanical or human effort
11from fabrics, leather or cloth and made for use as clothing,
12shoes or other attire.

13"Applicant." A person that applies for a loan in accordance
14with this chapter.

15"Area loan organization." A local development district, an
16industrial development agency organized and existing under the
17act of May 17, 1956 (1955 P.L.1609, No.537), known as the
18Pennsylvania Industrial Development Authority Act, or any other
19nonprofit economic development organization certified by the
20department as possessing the qualifications necessary to
21evaluate and administer loans made under this chapter.

22"Capital development project." Land, buildings, equipment
23and machinery and working capital which is acquired,
24constructed, renovated or used by a small business in accordance
25with any of the following:

26(1) As part of a for-profit project or venture not of a
27mercantile or service-related nature, except for hospitality
28industry projects.

29(2) As part of an effort to:

30(i) bring a small business into compliance with

1Federal or State environmental laws or regulations;

2(ii) complete an approved remediation project; or

3(iii) permit a small business to adopt generally
4acceptable pollution prevention practices.

5(3) As part of an effort to provide assistance to a
6small business that is a recycler of municipal or commercial
7waste or that is a manufacturer using recycled municipal or
8commercial waste materials.

9(4) As part of an effort to assist a small business with
10defense conversion activities.

11(5) As part of a for-profit project or venture to
12manufacture products to be exported out of the United States
13by a small business which is not of a mercantile or service-
14related nature, except for export-related services and
15international export-related mercantile ventures or advanced
16technology and computer-related services and mercantile
17ventures and which will increase this Commonwealth's national
18or international market shares.

19(6) As part of a for-profit project or venture that
20meets the requirements of section 2308 (relating to loans in
21distressed communities)

22(7) As part of an effort to assist in the start-up or
23expansion of a for-profit or not-for-profit child day-care
24center subject to licensure by the Commonwealth.

25"Child day-care center." Any premises in which child day
26care is provided simultaneously for seven or more children who
27are not related to the provider.

28"Community development institution." Any of the following:

29(1) An area loan organization for a distressed
30community.

1(2) A community development financial institution
2located in a distressed community and approved by the
3department.

4"Distressed community." A community which has any of the
5following:

6(1) A census tract or other specifically defined
7geographic area in which there is any of the following:

8(i) A median income below 80% of the median income
9for the United States or this Commonwealth.

10(ii) Twenty percent or more of the population is
11below the poverty level by family size published by the
12Bureau of the Census.

13(iii) An unemployment rate 50% higher than the
14national average.

15(2) An area which is designated a subzone, expansion
16subzone or improvement subzone under the act of October 6, 
171998 (P.L.705, No.92), known as the Keystone Opportunity Zone
18and Keystone Opportunity Expansion Zone Act.

19(3) Any other geographic area designated by the
20department as distressed. The designation shall be published
21in the Pennsylvania Bulletin.

22"EDA loan." A loan made under this chapter utilizing funds
23made available to the department under the Public Works and
24Economic Development Act of 1965 (Public Law 89-136, 42 U.S.C. § 
253121 et seq.).

26"Ex-Im Bank." The Export-Import Bank of the United States.

27"Export activity." An activity undertaken by a person within
28this Commonwealth related to exports.

29"Export business." A person that is engaged in a for-profit
30enterprise involving export activities and that employs 250 or

1fewer individuals.

2"Exports." Goods or services to be sold or performed outside
3the United States.

4"Farm commodity." Any Pennsylvania-grown agricultural,
5horticultural, aquacultural, vegetable, fruit and floricultural
6product of the soil, livestock and meats, wools, hides, furs,
7poultry, eggs, dairy products, nuts, mushrooms, honey products
8and forest products.

9"Fund." The Small Business First Fund continued under
10section 2304 (relating to fund and accounts).

11"Hazardous substance." Any element, compound or material
12which is any of the following:

13(1) Regulated as a hazardous air pollutant under section
146.6 of the act of January 8, 1960 (1959 P.L.2119, No.787),
15known as the Air Pollution Control Act.

16(2) Defined as a hazardous waste under section 103 of
17the act of July 7, 1980 (P.L.380, No.97), known as the Solid
18Waste Management Act.

19(3) Regulated under the act of December 7, 1990 
20(P.L.639, No.165), known as the Hazardous Material Emergency
21Planning and Response Act.

22"Hospitality industry project." A for-profit project or
23venture which involves a small business that operates a hotel,
24motel or other lodging facility and that employs at least five
25full-time equivalent employees at the time an application is
26submitted to the department for financing. The term includes a
27for-profit project or venture which involves a small business
28that operates a restaurant or food service operation open to the
29public, that has been in continuous operation for at least five
30years and that employs at least five full-time equivalent

1employees at the time an application is submitted.

2"Insurance policy." An export credit insurance policy for
3small businesses offered by the Export-Import Bank of the United
4States.

5"Natural disaster." As defined in 35 Pa.C.S. § 7102
6(relating to definitions).

7"Normal agricultural operation." As defined in section 2 of
8the act of June 10, 1982 (P.L.454, No.133), entitled "An act
9protecting agricultural operations from nuisance suits and
10ordinances under certain circumstances."

11"Pollution prevention." The reduction or elimination of
12pollution at its source. The term does not include any of the
13following:

14(1) A substitution of one hazardous or toxic substance
15for another which will cause an increased risk to the
16environment or to human health.

17(2) A cross-media transfer.

18(3) A delisting of a hazardous waste or toxic chemical.

19"Pollution prevention assistance agency." Any of the
20following:

21(1) An area loan organization.

22(2) An industrial resource center created pursuant to
23the act of June 22, 2001 (P.L.400, No.31), known as the
24Industrial Resources Center Partnership Act.

25"Pollution prevention infrastructure." A capital development
26project which permits a small business to adopt or install
27pollution prevention equipment or processes to:

28(1) Reduce or reuse raw materials onsite.

29(2) Reduce the production of waste.

30(3) Reduce energy consumption.

1"Program." The Small Business First Program established
2under section 2303 (relating to establishment).

3"Reuse." Use of a product or component in its original form
4more than once.

5"Small business." A person that is engaged in a for-profit
6enterprise and that employs 100 or fewer individuals. The term
7includes the following:

8(1) An enterprise located in a small business incubator
9facility.

10(2) An agricultural processor.

11(3) An agricultural producer.

12(4) An enterprise which manufactures apparel products.

13(5) An enterprise which is a for-profit or not-for-
14profit child day-care center subject to licensure by the
15Commonwealth.

16"Working capital." Capital used by a small business for
17operations, excluding fixed assets and production machinery and
18equipment.

19§ 2303. Establishment.

20There is established within the department a program to be
21known as the Small Business First Program. The program shall be
22administered by the department and provide loans to eligible
23persons for certain projects which encourage job-creating and
24job-preserving economic development within this Commonwealth.

25§ 2304. Fund and accounts.

26(a) Fund.--The Small Business First Fund, created under
27section 1302(a) of the act of June 29, 1996 (P.L.434, No.67),
28known as the Job Enhancement Act, is continued. The Treasury
29Department shall credit the following to the fund:

30(1) Appropriations made by the General Assembly to the

1department for the program.

2(2) Federal funds made available under the Public Works
3and Economic Development Act of 1965 (Public Law 89-136, 42 
4U.S.C. § 3121 et seq.) or any other Federal statute,
5regulation or program for the program.

6(3) Payments from recipients of loans made from the
7fund.

8(4) Payments from recipients of loans made under the
9former act of July 2, 1984 (P.L.545, No.109), known as the
10Capital Loan Fund Act.

11(5) Interest income derived from investment of the money
12in the fund.

13(6) Any other deposits, payments or contributions from
14any other source made available to the department for the
15program.

16(b) Pollution prevention assistance.--The Pollution
17Prevention Assistance Account, created under the act of June 29, 
181996 (P.L.434, No.67), known as the Job Enhancement Act, is
19continued. The Treasury Department shall credit the following to
20this account:

21(1) Appropriations made by the General Assembly to the
22department for pollution prevention assistance.

23(2) Payments from recipients of loans made from the
24Pollution Prevention Assistance Account.

25(3) Transfers from the Hazardous Sites Cleanup Fund as
26established in section 602.3 of the act of March 4, 1971 
27(P.L.6, No.2), known as the Tax Reform Code of 1971.

28(4) Interest income derived from investment of the money
29in the Pollution Prevention Assistance Account.

30(5) Any other deposits, payments or contributions from

1any other source made available to the department for
2pollution prevention assistance.

3(c) Use of fund.--

4(1) Money in the fund may be used as follows:

5(i) By the department to make loans in accordance
6with this chapter and for administrative costs of the
7department in administering the program.

8(ii) By area loan organizations for administrative
9costs associated with the program which are approved by
10the department.

11(2) Money from the fund derived from appropriations
12specified for export financing assistance may be deposited by
13the department in banks or trust companies in special
14accounts. The special accounts must be continuously secured
15by a pledge of direct obligations of the United States or of
16the Commonwealth having an aggregate market value, exclusive
17of accrued interest, at least equal to the balance on deposit
18in the account. The securities shall be deposited with the
19department to be held by a trustee or agent satisfactory to
20the department. Banks and trust companies are authorized to
21give security under this paragraph. Money in these special
22accounts shall be paid out on order of the department.

23(d) Use of Pollution Prevention Assistance Account.--Money
24in the Pollution Prevention Assistance Account may be used by
25the department to provide loans to small businesses for the
26adoption or installation of pollution-prevention or energy-
27efficient equipment or processes in accordance with section 2309
28(relating to pollution prevention assistance loans).

29§ 2305. Department responsibilities.

30(a) General rule.--The department shall do all of the

1following:

2(1) Administer the program.

3(2) Establish written guidelines as necessary. Any
4guidelines established shall be included in the report
5required by Chapter 3 (relating to economic development
6financing strategy).

7(3) Deposit payments made by recipients in the fund or
8the Pollution Prevention Assistance Account, as appropriate.

9(4) Approve standards for area loan organization
10application fees.

11(5) Approve community development financial
12institutions.

13(b) Program.--In administering the program, the department
14may do any of the following:

15(1) Provide grants or other financial assistance to area
16loan organizations for any of the following purposes:

17(i) To establish loan reserve funds.

18(ii) To reimburse loan losses to commercial banks
19and other financial institutions as a means of
20encouraging the expansion and financing of small
21businesses.

22(2) Apply to the Ex-Im Bank for delegated authority
23lender status under the Ex-Im Bank's Working Capital Guaranty
24Program.

25(3) Utilize the outstanding portfolio of loans made
26under this chapter to raise additional funds by selling,
27securing, hypothecating or otherwise using such loan proceeds
28as a financing vehicle if the funds raised are used by the
29department for either of the following purposes:

30(i) To make new and additional loans under this

1chapter.

2(ii) To pay costs associated with financing.

3§ 2306. Capital development loans.

4(a) Application.--A small business may submit an application
5and any applicable application fee to its area loan organization
6requesting a loan for certain costs of a capital development
7project. The application shall be on the form required by the
8department and shall include or demonstrate all of the
9following:

10(1) The name and address of the applicant.

11(2) A statement of the amount of loan assistance sought.

12(3) A statement of the capital development project,
13including a detailed statement of the cost of the project.

14(4) A financial commitment from a responsible source for
15any cost of the capital development project in excess of the
16amount requested.

17(5) Any other information required by the department.

18(b) Area loan organization review.--

19(1) Upon receipt of a completed application, an area
20loan organization shall investigate and determine all of the
21following:

22(i) If the applicant is a small business.

23(ii) If the project is a capital development
24project.

25(iii) If, when the applicant is a small business,
26the capital development project demonstrates a
27substantial likelihood of creating or preserving
28employment activities in this Commonwealth or if, when
29the applicant is an agricultural producer, the project
30demonstrates a substantial likelihood of enhancing and

1growing normal agriculture operations.

2(iv) The ability of the applicant to meet and
3satisfy the debt service as it becomes due and payable.

4(v) The existence and sufficiency of collateral for
5the loan.

6(vi) Relevant criminal and credit history and
7ratings of the applicant as determined from outside
8credit reporting services and other sources.

9(vii) The number of employment opportunities to be
10created or preserved by the proposed capital development
11project.

12(viii) If the applicant complied with all other
13criteria established by the department.

14(2) Upon being satisfied that all requirements have been
15met, the area loan organizations shall recommend the
16applicant to the department and forward the application with
17all supporting documentation to the department for its review
18and approval.

19(c) Department review.--

20(1) Within 30 days of receiving a recommendation and a
21completed application, the department shall review the
22application. If the department is satisfied that all
23requirements have been met, the department may approve the
24loan request in accordance with the following:

25(i) A loan for land, buildings and machinery and
26equipment may not exceed $200,000 or 50% of the total
27capital development project costs, whichever is less. For
28the purposes of this subparagraph, capital development
29project costs incurred during the 12-month period prior
30to the date of submission of the application to the

1department shall be considered part of the total capital
2development project costs.

3(ii) A loan for working capital may not exceed
4$100,000 or 50% of the total capital development project
5costs, whichever is less.

6(iii) Except for loans to agricultural producers, a
7loan must create or preserve one job for every $25,000
8loaned.

9(2) The department shall notify the area loan
10organization and applicant of its decision.

11(d) Approvals.--For applications which are approved, the
12department shall draw an advance equal to the principal amount
13of the loan from the fund. The advance shall be forwarded to the
14area loan organization and, upon receipt by the area loan
15organization, shall become an obligation of the area loan
16organization. Prior to providing loan funds to the applicant,
17the area loan organization shall require the applicant to
18execute a note and to enter into a loan agreement. In addition
19to the requirements of subsection (e), the loan agreement shall
20include a provision requiring the recipient to use the loan
21proceeds to pay the costs of the capital development project.
22The department may require the area loan organization to impose
23other terms and conditions on the recipient if the department
24determines that they are in the best interests of this
25Commonwealth, including a provision requiring collateral for any
26penalty imposed under subsection (g).

27(e) Loan terms.--A loan agreement entered into in accordance
28with subsection (c) shall do all of the following:

29(1) State the collateral securing the loan. All loans
30shall be secured by lien positions on collateral at the

1highest level of priority as may be determined by the area
2loan organization with the approval of the department.

3(2) State the repayment period in accordance with the
4following:

5(i) A loan for real property shall have a repayment
6period of up to 15 years.

7(ii) A loan for machinery and equipment shall have a
8repayment period of up to ten years.

9(iii) A loan for working capital shall have a
10repayment period of up to three years.

11(iv) If, in a capital development project, there are
12two or more uses planned, the loan terms may be blended.

13(3) State the interest rate in accordance with the
14following:

15(i) Except as provided in subparagraph (ii), loans
16shall be made at an interest rate not to exceed 5% for
17the term of the loan.

18(ii) A loan to a small business which is an
19agricultural producer shall be made at an interest rate
20of not less than 2% for the term of the loan if all of
21the following apply:

22(A) A declaration under 35 Pa.C.S. § 7301(c)
23(relating to general authority of Governor) is in
24effect for at least ten days prior to the date of
25application.

26(B) The application is made within nine months
27of termination of the declaration.

28(C) The agricultural producer is in the area
29which has been declared to be a natural disaster
30area.

1(f) Loan administration.--A loan made under this section
2shall be administered in accordance with departmental policies
3and procedures by the area loan organization which made the
4loan. Each area loan organization shall submit an annual report
5on the form required by the department and which includes or
6demonstrates all of the following:

7(1) Each outstanding loan.

8(2) The date approved.

9(3) The original principal amount.

10(4) The current principal balance.

11(5) The interest rate.

12(6) The purpose for which the loan was made.

13(7) An enumeration of any problems or issues which have
14arisen with regard to each loan.

15(8) A statement regarding the progress of the small
16business in creating or preserving its requisite number of
17employment opportunities.

18(9) Any other information or documentation required by
19the department.

20(g) Penalty.--

21(1) Except as provided in paragraph (2), the department
22shall impose a penalty upon a recipient if the recipient
23fails to create or preserve the number of employment
24opportunities specified in its approved application.

25(2) The department may waive the penalty required by
26paragraph (1) if the department determines that the failure
27was due to circumstances outside the control of the
28recipient.

29(3) The amount of the penalty imposed under paragraph
30(1) shall be equal to an increase in the interest rate to 2%

1greater than the current prime interest rate for the
2remainder of the loan.

3(h) Defaults.--The department may by foreclosure take title
4to a capital development project which it financed if
5acquisition is necessary to protect a loan made under this
6section. The department shall pay all costs arising out of the
7foreclosure and acquisition from moneys held in the fund. The
8department may, in order to minimize financial losses and
9sustain employment, lease the capital development project. The
10department may withdraw moneys from the fund to purchase first
11mortgages and to make payments on first mortgages on any capital
12development project which it financed where purchase or payment
13is necessary to protect a loan made under this section. The
14department may sell, transfer, convey and assign the first
15mortgages and shall deposit any moneys derived from the sale of
16any first mortgages in the fund.

17§ 2307. EDA loans.

18(a) Application and administration procedures.--The
19department shall establish application and administration
20procedures to be used for EDA loans. The procedures shall be
21established by guidelines and shall conform in all respects to
22those procedures required or established by the Economic
23Development Administration for use of Federal funds under the
24Public Works and Economic Development Act of 1965 (Public Law
2589-136, 42 U.S.C. § 3121 et seq.).

26(b) Eligibility for EDA loans.--The department shall
27establish eligibility requirements to be used for EDA loans. The
28requirements shall be established by guidelines and shall
29conform in all respects to those procedures required or
30established by the Economic Development Administration for use

1of Federal funds under the Public Works and Economic Development
2Act of 1965.

3§ 2308. Loans in distressed communities.

4(a) Application.--A small business located in a distressed
5community may submit an application and any applicable
6application fee to a community development institution
7requesting a loan for certain costs of a capital development
8project. The application shall be on the form required by the
9department and shall include or demonstrate all of the
10following:

11(1) The name and address of the applicant.

12(2) A statement that the small business is engaged in
13business-to-public service or in the mercantile, commercial
14or point-of-sale retail business sectors.

15(3) A statement of the amount of loan assistance sought.

16(4) A statement of the capital development project,
17including a detailed statement of the cost of the project.

18(5) A financial commitment from a responsible source for
19the cost of the capital development project in excess of the
20amount requested.

21(6) Any other information required by the department.

22(b) Community development institution review.--

23(1) Upon receipt of a completed application, a community
24development institution shall investigate and determine all
25of the following:

26(i) If the applicant is a small business which is
27engaged in business-to-public service or in the
28mercantile, commercial or point-of-sale retail business
29sectors in accordance with conditions or criteria
30established by the department.

1(ii) If the project is a capital development
2project.

3(iii) If the applicant has demonstrated a direct
4impact on the community in which the capital development
5project is or will be located, on residents of that
6community or on the local and/or regional economy. The
7department shall establish criteria that will assist in
8making this demonstration.

9(iv) Number of employment opportunities to be
10created or preserved by the proposed capital development
11project.

12(v) If the applicant complied with all other
13criteria established by the department.

14(2) Upon being satisfied that all requirements have been
15met, the community development institution shall recommend
16the applicant to the department and forward the application
17with all supporting documentation to the department for its
18review and approval.

19(c) Department review.--

20(1) Upon receipt of a recommendation and a completed
21application, the department shall investigate and determine
22all of the following:

23(i) The ability of the applicant to meet and satisfy
24the debt service as it becomes due and payable. In
25reviewing repayment obligations, loans shall not be
26approved on the basis of direct financial return on
27investment and shall not be held to the loan loss
28standards of private commercial lenders. Loans shall be
29reviewed for the purpose of establishing a strong
30economic base and promoting entrepreneurial activity

1within the distressed community.

2(ii) The existence and sufficiency of collateral for
3the loan.

4(iii) Relevant criminal and credit history and
5ratings of the applicant as determined from outside
6credit reporting services and other sources.

7(2) If the department is satisfied that all requirements
8have been met, the department may approve the loan request in
9an amount not to exceed $200,000 or 50% of the total capital
10development project costs, whichever is less. For the purpose
11of this paragraph, capital development project costs, except
12the costs related to working capital, incurred during the 12-
13month period prior to the date of submission of the
14application to the department shall be considered part of the
15total capital development project costs.

16(3) The department shall notify the community
17development institution and applicant of its decision.

18(d) Approvals.--For applications which are approved, the
19department shall draw an advance equal to the principal amount
20of the loan from the fund and, prior to providing loan funds to
21the applicant, the department shall require the applicant to
22execute a note and to enter into a loan agreement. In addition
23to the requirements of subsection (e), the loan agreement shall
24include a provision requiring the recipient to use the loan
25proceeds to pay the costs of the capital development project.
26The department may impose other terms and conditions on the
27recipient if the department determines they are in the best
28interests of this Commonwealth, including a provision requiring
29collateral for any penalty imposed under subsection (g).

30(e) Loan terms.--A loan agreement entered into in accordance

1with subsection (d) shall do all of the following:

2(1) State any collateral securing the loan. The
3department may use its best judgment to identify and secure
4collateral.

5(2) State the repayment period which may be flexible.

6(3) State the interest rate which may not be less than
72% nor more than 5% for the term of the loan.

8(4) State that the recipient agrees to maintain, at a
9minimum, the number of jobs in existence as of the date of
10loan application.

11(f) Loan administration.--A loan made under this section
12shall be administered in accordance with departmental policies
13and procedures.

14(g) Penalty.--

15(1) Except as provided in paragraph (2), the department
16shall impose a penalty upon a recipient if the recipient
17fails to preserve the number of employment opportunities
18specified in its approved application.

19(2) The department may waive the penalty required by
20paragraph (1) if the department determines that the failure
21was due to circumstances outside the control of the
22recipient.

23(3) The amount of any penalty imposed under paragraph
24(1) shall be equal to an increase in the interest rate to 2%
25greater than the current prime interest rate for the
26remainder of the loan.

27(h) Defaults.--The department may take title by foreclosure
28to a capital development project which it financed where
29acquisition is necessary to protect a loan made under this
30section. The department shall pay all costs arising out of the

1foreclosure and acquisition from money held in the fund. The
2department may, in order to minimize financial losses and
3sustain employment, lease the capital development project. The
4department may withdraw money from the fund to purchase first
5mortgages and to make payments on first mortgages on any capital
6development project which it financed if purchase or payment is
7necessary to protect a loan made under this section. The
8department may sell, transfer, convey and assign the first
9mortgages and shall deposit in the fund money derived from the
10sale of any first mortgages.

11§ 2309. Pollution prevention assistance loans.

12(a) Application.--A small business may submit an application
13and any application fee to a pollution prevention assistance
14agency requesting a loan for a pollution prevention
15infrastructure. The application shall be on the form required by
16the department and shall include or demonstrate all of the
17following:

18(1) The name and address of the applicant.

19(2) A statement of the amount of loan assistance sought.

20(3) A statement of the pollution prevention
21infrastructure, including a detailed statement of the cost of
22the infrastructure.

23(4) A financial commitment from a responsible source for
24the cost of the pollution prevention infrastructure in excess
25of the amount requested.

26(5) Any other information required by the department.

27(b) Pollution prevention assistance agency review.--

28(1) Upon receipt of a completed application, a pollution
29prevention assistance agency shall investigate and determine
30all of the following:

1(i) If the applicant is a small business.

2(ii) If the project is for pollution prevention
3infrastructure.

4(iii) If the applicant complied with all other
5criteria established by the department.

6(2) Upon being satisfied that all requirements have been
7met, the pollution prevention assistance agency shall
8recommend the applicant to the department and forward the
9application with all supporting documentation to the
10department for its review and approval.

11(c) Department review.--

12(1) Upon receipt of a recommendation and a completed
13application, the department shall investigate and determine
14all of the following:

15(i) If the pollution prevention infrastructure
16demonstrates a substantial likelihood of preventing or
17reducing pollution. The Department of Environmental
18Protection shall assist the department in reviewing the
19applications and provide technical assistance.

20(ii) The ability of the applicant to meet and
21satisfy the debt service as it becomes due and payable.
22In reviewing repayment obligations, loans shall not be
23approved on the basis of direct financial return on
24investment and shall not be held to the loan loss
25standards of private commercial lenders. Loans shall be
26reviewed for the purpose of reducing pollution through
27source reduction technologies or processes.

28(iii) The existence and sufficiency of collateral
29for the loan.

30(iv) Relevant criminal and credit history and

1ratings of the applicant as determined from outside
2credit reporting services and other sources.

3(2) If the department is satisfied that all requirements
4have been met, the department may approve the loan request. A
5loan approved under this subsection may not exceed the lesser
6of:

7(i) $100,000; or

8(ii) 75% of infrastructure costs.

9(3) The department shall notify the pollution prevention
10assistance agency and applicant of its decision.

11(d) Approvals.--For applications which are approved, the
12department shall draw an advance equal to the principal amount
13of the loan from the Pollution Prevention Assistance Account.
14Prior to providing loan funds to the applicant, the department
15shall require the applicant to execute a note and to enter into
16a loan agreement. In addition to the requirements of subsection
17(e), the loan agreement shall include a provision requiring the
18recipient to use the loan proceeds to pay the costs of the
19pollution prevention infrastructure. The department may impose
20other terms and conditions on the recipient if the department
21determines they are in the best interests of this Commonwealth,
22including a provision requiring collateral for any penalty
23imposed under subsection (g).

24(e) Loan terms.--A loan agreement entered into in accordance
25with subsection (d) shall do all of the following:

26(1) State the collateral securing the loan. All loans
27shall be secured by lien positions on collateral at the
28highest level of priority as may be determined by the
29department.

30(2) State the repayment period which may not exceed 10

1years.

2(3) State that the interest rate is 2%.

3(4) State that any loan fee is not to exceed 5% of the
4loan amount.

5(f) Loan administration.--A loan made under this section
6shall be administered in accordance with departmental policies
7and procedures.

8(g) Penalty.--

9(1) Except as provided in paragraph (2), the department
10shall impose a penalty upon a recipient if the recipient
11fails to carry out the pollution prevention infrastructure
12project as specified in its approved application.

13(2) The department may waive the penalty required by
14paragraph (1) if the department determines that the failure
15was due to circumstances outside the control of the
16recipient.

17(3) The amount of any penalty imposed under paragraph
18(1) shall be equal to an increase in the interest rate to 2%
19greater than the current prime interest rate for the
20remainder of the loan.

21(h) Defaults.--The department may take title by foreclosure
22to a pollution prevention infrastructure which it financed if
23acquisition is necessary to protect a loan made under this
24section. The department shall pay all costs arising out of the
25foreclosure and acquisition from money held in the Pollution
26Prevention Assistance Account. The department may, in order to
27minimize financial losses and sustain employment, lease the
28pollution prevention infrastructure. The department may withdraw
29money from the Pollution Prevention Assistance Account to
30purchase first mortgages and to make payments on first mortgages

1on any pollution prevention infrastructure which it financed if
2the purchase or payment is necessary to protect a loan made
3under this section. The department may sell, transfer, convey
4and assign the first mortgages and shall deposit any money
5derived from the sale of any first mortgages in the Pollution
6Prevention Assistance Account.

7§ 2310. Export financing loans.

8(a) Application.--A person may submit an application and any
9applicable application fee to the department or its area loan
10organization requesting a loan for certain costs of a capital
11development project which will be used in export activities. The
12application must be on the form required by the department and
13must include or demonstrate all of the following:

14(1) The name and address of the applicant.

15(2) A statement of the amount of loan assistance sought.

16(3) A statement of the capital development project,
17including a detailed statement of the cost of the project.

18(4) A financial commitment from a responsible source for
19any cost of the capital development project in excess of the
20amount requested.

21(5) A statement that the loan, if approved, would not
22supplant funding from private sector sources on commercially
23reasonable terms.

24(6) Any other information required by the department.

25(b) Review.--Upon receipt of a completed application, the
26department shall investigate and determine all of the following:

27(1) If the applicant is an export business.

28(2) If the project is a capital development project.

29(3) The ability of the applicant to meet and satisfy the
30debt service as it becomes due and payable.

1(4) The existence and sufficiency of collateral for the
2loan.

3(5) Relevant criminal and credit history and ratings of
4the applicant as determined from outside credit reporting
5services and other sources.

6(6) Number of employment opportunities to be created or
7preserved by the proposed capital development project.

8(7) If the applicant complied with all other criteria
9established by the department.

10(c) Approvals.--If the department is satisfied that all
11requirements have been met, the department may approve the loan
12request. A loan approved under this section may not exceed
13$350,000. The department shall notify the applicant and, if
14applicable, the area loan organization of its decision. The
15department shall reserve an amount equal to the principal amount
16of the loan within the fund or the special account authorized by
17section 2304(c)(2) (relating to fund and accounts). Prior to
18providing funds to the applicant, the department shall require
19the applicant to execute a note and enter into a loan agreement.
20In addition to the requirements of subsection (d), the loan
21agreement shall include a provision requiring the recipient to
22use the loan proceeds to pay the costs of the capital
23development project. The department may impose other terms and
24conditions on the recipient if the department determines they
25are in the best interests of this Commonwealth, including any of
26the following:

27(1) A provision requiring collateral for any penalty
28imposed under subsection (f).

29(2) A provision requiring the person to be eligible for
30an insurance policy.

1(3) A provision requiring the loan to be guaranteed by
2the Working Capital Guaranty Program offered by the Ex-Im
3Bank.

4(4) A provision requiring an export credit sales
5contract insured by an insurance policy.

6(d) Loan terms.--A loan agreement entered into in accordance
7with subsection (c) shall do all of the following:

8(1) State the collateral securing the loan. All loans
9shall be secured by lien positions on collateral at the
10highest level of priority as may be determined by the
11department.

12(2) State the repayment period as determined by the
13department.

14(3) State the interest rate as determined by the
15department.

16(e) Loan administration.--A loan made under this section
17shall be administered in accordance with departmental policies
18and procedures.

19(f) Penalty.--

20(1) Except as provided in paragraph (2), the department
21shall impose a penalty upon a recipient if the recipient
22fails to carry out the export activities specified in its
23approved application.

24(2) The department may waive the penalty required by
25paragraph (1) if the department determines that the failure
26was due to circumstances outside the control of the
27recipient.

28(3) The amount of the penalty imposed under paragraph
29(1) shall be equal to an increase in the interest rate to 2%
30greater than the current prime interest rate for the

1remainder of the loan.

2(g) Defaults.--The department may, by foreclosure, take
3title to a capital development project which it financed if
4acquisition is necessary to protect a loan made under this
5section. The department shall pay all costs arising out of the
6foreclosure and acquisition from money held in the fund or a
7special account authorized by section 2304(c)(2). The department
8may, in order to minimize financial losses and sustain
9employment, lease the capital development project. The
10department may withdraw money from the fund or a special account
11authorized by section 2304(c)(2) to purchase first mortgages and
12to make payments on first mortgages on any capital development
13project which it financed if purchase or payment is necessary to
14protect a loan made under this section. The department may sell,
15transfer, convey and assign the first mortgages and shall
16deposit any money derived from the sale of any first mortgages
17in the fund or a special account authorized by section 2304(c)
18(2).

19§ 2311. Reporting and inspection.

20(a) Inspection.--An applicant or a recipient shall, upon
21request, permit authorized employees of the department or its
22agent to inspect the plant, books and records of the applicant
23or recipient.

24(b) Updating.--An applicant or a recipient shall provide
25updated information to the department and its agents if
26conditions change or to the extent that the information
27originally given becomes inaccurate or misleading.

28(c) Periodic reports.--A recipient shall provide the
29department and its agents with such periodic financial reports
30as the department may require until the loan is repaid in full.

1(d) Financial and performance audits.--An agent of the
2department shall annually submit to the department, at the
3agent's expense, an independent financial audit. If the audit
4reveals misconduct of a material nature on the part of the
5agent, the department shall take appropriate action.

6§ 2312. Limitations.

7No loans shall be recommended or approved if the proceeds of
8the loan could do any of the following:

9(1) Cause, aid or assist directly in the relocation of
10any business operations from one part of this Commonwealth to
11another unless there is at least a 25% net increase in
12employment.

13(2) Refinance any portion of the total cost of a capital
14development project, pollution prevention infrastructure or
15other existing loans or debt.

16(3) Finance a capital development project or pollution
17prevention infrastructure located outside the geographic
18boundaries of this Commonwealth.

19(4) Provide funds, directly or directly, for payment
20distribution or as loan owners, partners or shareholders of a
21small business, except as ordinary compensation for services
22rendered.

23(5) Provide funds for speculation in real or personal
24property, whether tangible or intangible.

25CHAPTER 29

26MACHINERY AND EQUIPMENT LOANS

27

28Sec.

292901. Scope.

302902. Definitions.

12903. Establishment.

22904. Machinery and Equipment Loan Fund.

32905. Eligibility for loans; terms and conditions.

42906. Application and administration.

52907. Powers of secretary.

62908. Reporting and inspection.

72909. Nondiscrimination.

82910. Conflict of interest.

92911. Reports to General Assembly.

102912. Guidelines.

11§ 2901. Scope.

12This chapter relates to the Machinery and Equipment Loan
13Program.

14§ 2902. Definitions.

15The following words and phrases when used in this chapter
16shall have the meanings given to them in this section unless the
17context clearly indicates otherwise:

18"Business enterprise." A for-profit corporation, partnership
19or proprietorship. The term includes a medical facility.

20"Farm commodity." Any Pennsylvania-grown agricultural,
21horticultural, aquacultural, vegetable, fruit and floricultural
22product of the soil, livestock and meats, wools, hides, furs,
23poultry, eggs, dairy products, nuts, mushrooms, honey products
24and forest products.

25"Fund." The Machinery and Equipment Loan Fund created and
26established by this chapter.

27"Medical facility." An entity licensed as a hospital under
28the act of June 13, 1967 (P.L.31, No.21), known as the Public
29Welfare Code, or the act of July 19, 1979 (P.L.130, No.48),
30known as the Health Care Facilities Act.

1"Normal agricultural operation." The term shall have the
2same meaning as given to it in section 2 of the act of June 10, 
31982 (P.L.454, No.133), entitled "An act protecting agricultural
4operations from nuisance suits and ordinances under certain
5circumstances."

6"Production agriculture." The management and use of a normal
7agricultural operation for the production of a farm commodity.

8§ 2903. Establishment.

9There is established within the department a program to be
10known as the Machinery and Equipment Loan Program. The program
11shall be administered by the department and provide loans to
12business enterprises for machinery and equipment.

13§ 2904. Machinery and Equipment Loan Fund.

14(a) Creation.--There is created a special account in the
15Treasury Department, to be known as the Machinery and Equipment
16Loan Fund, to which shall be credited all program appropriations
17made by the General Assembly, all proceeds from loan repayments
18and any and all other deposits, payments or contributions from
19any other source made available to the fund. The fund shall
20operate as a revolving fund whereby all appropriations, payments
21and interest made thereto may be applied and reapplied to the
22purposes of this chapter.

23(b) Credits to fund.--All appropriations, deposits and
24contributions made to the fund shall be immediately credited in
25full to the fund, and earnings on the moneys held in the fund
26shall also be credited to the fund for the purposes of this
27chapter.

28§ 2905. Eligibility for loans; terms and conditions.

29(a) Loans; general rules.--The secretary may make advances
30from the fund, subject to the terms, conditions and restrictions

1provided under this chapter, for the purpose of making loans to
2business enterprises involved in industrial processes, mining,
3manufacturing, production agriculture, information technology,
4biotechnology, service as a medical facility or other industrial
5or technology sectors, as defined by the department, to acquire
6and install new machinery and equipment or upgrade existing
7machinery and equipment, including the acquisition, application
8and utilization of computer hardware and software.

9(1) All loans shall be subject to all of the following
10conditions:

11(i) Be made to eligible business enterprises under
12the provisions of this chapter.

13(ii) Have a maximum loan ceiling of $5,000,000 or
1450% of the cost of the project, whichever is less.

15(iii) Be limited to the purchase and installation of
16new equipment and machinery or the upgrade of existing
17machinery and equipment. This subparagraph includes the
18acquisition, application and utilization of computer
19hardware and software.

20(iv) Be limited to projects that demonstrate the
21creation or retention of one job for every $25,000
22received from the fund. This subparagraph does not apply
23to loans made to business enterprises involved in
24production agriculture or to loans made to medical
25facilities.

26(v) Have an interest rate which shall be established
27by the secretary.

28(vi) Have a term of not in excess of ten years.

29(2) For loans to medical facilities, loan funds may be
30used only to finance the acquisition, installation and

1utilization of machinery and equipment, including computer
2hardware and software components, to be used in the
3prescribing and dispensing of medication for medical facility
4patients.

5(b) Restrictions.--No loans shall be made that do any of the
6following:

7(1) Cause, aid or assist in, directly or indirectly, the
8relocation of any business enterprise from one part of this
9Commonwealth to another unless there is at least a 25%
10increase in net employment.

11(2) Supplant funding that is otherwise available
12expeditiously from private sector sources on commercially
13reasonable terms.

14(3) Be for the purpose of refinancing any portion of the
15total project cost or other existing loans or debt.

16(4) Be for the purpose of financing projects located
17outside the geographic boundaries of this Commonwealth.

18(5) Be for the purpose of paying off a creditor that is
19inadequately secured and is in a position to sustain a loss.

20(6) Be for the purpose of repaying a debt owed to a
21small business investment company.

22(7) Provide funds for speculation in any kind of
23property, real or personal, tangible or intangible.

24(c) Security.--All loans shall be secured by no less than a
25second lien position on the equipment purchased and other
26sufficient collateral as determined by the secretary.

27§ 2906. Application and administration.

28(a) Procedures.--Application and administration procedures
29for fund loans shall be established by the secretary.

30(b) Receipt.--The secretary shall receive applications from

1eligible business enterprises for machinery and equipment loans.
2Applications shall be made to the secretary in the form and
3manner as the department may require.

4(c) Investigation.--Upon receipt of the application, the
5secretary shall investigate and review the application and
6either approve or disapprove the loan application by proper
7action of the department. The decision of the secretary shall be
8based, in whole or in part, upon the following criteria:

9(1) Ability of the applicant to meet and satisfy all
10debt service as it becomes due and payable.

11(2) Sufficiency of available collateral, including
12satisfactory lien positions on real and personal property.

13(3) Eligibility of the applicant as a business
14enterprise involved in industrial processes, manufacturing,
15mining, production agriculture, information technology,
16biotechnology, services as a medical facility or other
17industrial or technology sectors as defined by the secretary.

18(4) Sufficient evidence that funds shall be used only to
19acquire and install new equipment and machinery or upgrade
20existing equipment and machinery, including the acquisition,
21application and utilization of computer hardware and
22software.

23(5) Capital needs of the applicant.

24(6) Conformity of the project to the provisions of this
25chapter.

26(7) Relevant criminal and credit history and ratings of
27applicant as determined from outside credit reporting
28services and other sources.

29(8) Number of net employment opportunities created and
30retained by the proposed project. This paragraph does not

1apply to business enterprises involved in production
2agriculture or medical facilities.

3(9) Supporting evidence that the loan project will
4increase the firm's competitiveness and value added within
5its respective industry.

6(10) Explanation of how the loan will aid the
7Commonwealth in its efforts to assist business enterprises to
8increase their productivity and improve the future
9competitive position of this Commonwealth's industries.

10(11) Compliance with the loan amount limitations
11provided for machinery and equipment loans.

12(12) Payment to date of all tax obligations due and
13owing to the Commonwealth or any political subdivision
14thereof.

15(13) Conformity of all aspects of the loan transaction
16with the substantive and procedural provisions of this
17chapter and regulations promulgated hereunder.

18(14) Such information and documentation as the secretary
19shall require.

20(d) Notification.--The secretary shall notify the applicant
21of final approval or disapproval of the loan application within
22a reasonable period of time following the receipt of the
23application. In the case of approval of a loan application, the
24secretary shall arrange to draw the loan amount from the fund
25and advance the sum to the recipient. The advance shall be made
26available in the form of a loan transaction, which loan shall be
27evidenced by a note executed by the recipient and secured in a
28manner as the secretary shall require in conformity in all
29respects to the loan as approved by the secretary.

30(e) Policy requirements and report.--All loans shall be

1administered and monitored by the department in accordance with
2the policies and procedures prescribed by the secretary. On or
3before September 1 of each year, the secretary shall prepare a
4report that includes the following:

5(1) Each outstanding loan.

6(2) The date of approval.

7(3) The original principal balance.

8(4) The current principal balance.

9(5) The interest rate.

10(6) The purpose for which the loan was made.

11(7) An enumeration of any problems or issues which have
12arisen with regard to each loan.

13(8) A statement regarding the progress of the business
14enterprise in creating and retaining its requisite number of
15employment opportunities.

16(9) Such other information and documentation as the
17secretary shall require.

18(f) Penalty for noncompliance.--In the event that a loan
19recipient shall not comply with its approved application by
20failing to create or preserve the number of employment
21opportunities specified in its approved application, the
22secretary shall impose a penalty equal to an increase in the
23interest rate to 2% greater than the current prime interest rate
24for the remainder of the loan unless the penalty is waived by
25the secretary because the failure is due to circumstances
26outside the control of the loan recipient. The penalty shall be
27payable in installments that the secretary deems appropriate.

28§ 2907. Powers of secretary.

29The secretary shall have and may exercise all powers and
30authority necessary to the proper administration and

1implementation of this chapter and shall have the authority to
2adopt policies, procedures and guidelines and promulgate rules
3and regulations necessary to effectuate the provisions of this
4chapter.

5§ 2908. Reporting and inspection.

6(a) Inspection.--Each business enterprise which applies for
7or receives assistance under this chapter, upon reasonable
8request of the department, shall permit duly authorized
9employees of the department to inspect the plant, books and
10records of the business enterprise.

11(b) Updating.--Each business enterprise shall update the
12information given to the department in its application if
13conditions change or to the extent that the information given
14originally becomes inaccurate or misleading.

15(c) Periodic reports.--Each recipient of assistance under
16this chapter shall provide the department with periodic
17financial reports as the secretary may require until such time
18as the loan is paid off.

19§ 2909. Nondiscrimination.

20No loan shall be made to a business enterprise unless the
21business enterprise certifies to the department, in a form
22satisfactory to the department, that it shall not discriminate
23against any employee or any applicant for employment because of
24race, religion, color, national origin, sex or age. The business
25enterprise shall also certify to the department that it is not
26currently under citation for pollution violations and that in
27the future it will meet all applicable antipollution standards.

28§ 2910. Conflict of interest.

29No employee of the department shall, either directly or
30indirectly, be a party to or have any financial interest in any

1contract or agreement arising pursuant to this chapter.

2§ 2911. Reports to General Assembly.

3(a) Annual reports.--On or before September 1 of each year,
4the secretary shall provide a report to the Secretary of the
5Senate and to the Chief Clerk of the House of Representatives.
6The report shall describe all relevant activities of the
7department pursuant to this chapter and shall include the
8following:

9(1) List of business enterprises receiving loans from
10the fund and the amounts and terms of this assistance.

11(2) Loan amounts repaid. Information under this
12paragraph may be reported in the aggregate.

13(3) Loans outstanding, balances due and any penalties
14imposed. Information under this paragraph may be reported in
15the aggregate.

16(4) Jobs created by businesses receiving funds in
17previous years. Information under this paragraph may be
18reported in the aggregate.

19(5) Other relevant information as determined by the
20secretary.

21(b) Availability of departmental reports.--Reports prepared
22by the secretary under section 2906(e) (relating to application
23and administration) shall be made available upon request to
24members of the General Assembly.

25§ 2912. Guidelines.

26The department shall develop written guidelines for the
27implementation of this chapter.]

28Section 2. Section 1542(b) of Title 64 is amended to read:

29§ 1542. Revolving loan program accounts.

30* * *

1[(b) The First Industries Program account.--The authority
2shall establish an account for the program established in
3section 1552 (relating to First Industries Program). Proceeds of
4bonds issued to fund the First Industries Program, any moneys
5received as loan repayments or in repayment or recovery of loan
6guarantees under the program, or moneys otherwise made available
7to the program, shall be deposited in the account and made
8available for additional planning grants or loans or used for
9additional loan guarantees as provided in section 1552, subject
10to the provisions of any pledge to or agreement made by the
11authority with obligees of the authority.]

12Section 3. Sections 1552 and 1553 of Title 64 are repealed:

13[§ 1552. First Industries Program.

14(a) Establishment.--There is established a program to be
15known as the First Industries Program. The program shall provide
16financial assistance for projects related to tourism and
17agriculture located within this Commonwealth. The board shall
18allocate funds made available to the program among the different
19methods of financing authorized in this section.

20(b) Applications for planning grants.--An applicant may
21submit an application to the authority requesting a planning
22grant in an amount not to exceed $250,000 for the costs of
23predevelopment activities and feasibility studies for a project
24related to tourism or agriculture. The application shall be on
25the form required by the board and shall include or demonstrate
26all of the following:

27(1) The applicant's name and address.

28(2) The location of the project.

29(3) A description of the project.

30(4) An estimate of the cost of the predevelopment

1activities and feasibility studies and the goal to be
2achieved by carrying out the proposed activities or studies.

3(5) A statement of the amount of the planning grant
4sought.

5(6) Any other information required by the board.

6(c) Review and approval of planning grant applications.--

7(1) The board shall review the application to determine
8that the project demonstrates one or more of the following:

9(i) The project will have a demonstrable impact on
10the economy or well-being of the neighborhood, community
11or region where the project will be located.

12(ii) The project will promote research and
13development efforts leading to increased
14commercialization or utilization of farm commodities.

15(iii) The project will result in environmentally
16friendly or energy efficient operations related to
17agriculture, including projects authorized by the act of
18December 12, 1994 (P.L.888, No.128), known as the
19Agricultural By-Product Management Technology Act.

20(iv) The project will result in more cost-effective
21and efficient marketing of regional assets related to
22tourism or agriculture.

23(v) The project will result in a substantial
24increase in revenues for the Commonwealth or the host
25municipality.

26(vi) The project proposes to utilize Commonwealth-
27owned natural resources for public/private development of
28tourism.

29(2) Upon being satisfied that the requirements of
30paragraph (1) have been met, the board may approve the

1application, and, if approved, the authority shall award a
2planning grant.

3(3) Copies of all reports and studies prepared with
4planning grant funds shall be filed with the authority and
5shall be made available to any person upon request.

6(d) Loans to applicants.--If the department approves an
7application for a loan under the programs established in 12
8Pa.C.S. Ch. 23 (relating to small business first) or 29
9(relating to machinery and equipment loans), the department may
10request that the authority finance the loan. Upon being
11satisfied that the project is related to agriculture or tourism,
12the board may approve the request, and, if approved, the
13authority shall award a loan. Loans made under this subsection
14shall be administered by the department. Payments received shall
15be forwarded to the authority and credited to the account
16established in accordance with section 1542(b) (relating to
17revolving loan program accounts).

18(e) Loan guarantees.--

19(1) An applicant may request a guarantee for a loan to
20be made by a commercial lending institution or community
21development financial institution to assist with the
22financing of a project related to tourism or agriculture. The
23applicant may be the commercial lending institution or
24community development financial institution applying on
25behalf of a borrower. The application must be on the form
26required by the board and must include or demonstrate all of
27the following:

28(i) The applicant's name and address. If the
29applicant is a commercial lending institution or
30community development financial institution, the

1borrower's name and address.

2(ii) A description of the project.

3(iii) A statement describing the anticipated
4economic impact to the Commonwealth and the host
5municipality as a result of the project.

6(iv) A description of the proposed project
7financing, including terms, conditions and the collateral
8or security required for the loan for which the guarantee
9is being requested.

10(v) A copy of the applicant's last two years of
11financial statements prepared or reported on by an
12independent certified public accountant. If the applicant
13is a commercial lending institution or a community
14development financial institution, a copy of the
15borrower's last two years of financial statements
16prepared or reported on by an independent certified
17public accountant.

18(vi) The amount of the loan guarantee that is being
19requested.

20(vii) The total project cost and the identification
21of all sources of capital for the project.

22(viii) Any other information required by the board.

23(2) The board shall review the application to determine
24all of the following:

25(i) (A) Except as set forth in clause (B), that the
26project has been awarded a planning grant under this
27section or that at least $1,000,000 of private funds
28are being invested in the project.

29(B) Beginning on the effective date of this
30paragraph through July 15, 2015, that the project has

1been awarded a planning grant under this section or
2that at least $500,000 of private funds are being
3invested in the project.

4(ii) That the value of the proposed collateral is
5sufficient to cover the full amount of the loan.

6(iii) That the applicant complied with all other
7criteria established by the board.

8(3) Upon being satisfied that all requirements have been
9met, the board may approve the guarantee, and, if approved,
10the authority shall execute a guarantee agreement in favor of
11the commercial lending institution or community development
12financial institution stating the terms and amounts of the
13guarantee. Except as provided in paragraph (3.1), the
14guarantee may not exceed 50% of the outstanding principal
15amount of the loan or $2,500,000 at any point in time,
16whichever is less. In addition to any other terms and
17conditions required by the board, the guarantee agreement
18shall provide for all of the following:

19(i) The procedure for the submission by the
20commercial lending institution or community development
21financial institution of a claim for payment. This
22procedure shall require that the commercial lending
23institution or community development financial
24institution demonstrate that it has exhausted all
25available remedies against the borrower, other guarantors
26and collateral before seeking payment under the
27agreement.

28(ii) A requirement that a percentage of any moneys
29recovered subsequent to the payment of a claim by the
30authority be remitted to the authority.

1(iii) Periodic reporting requirements by the
2commercial lending institution or community development
3financial institution regarding itself and regarding the
4loans which have been awarded guarantees under this
5section.

6(3.1) Beginning on the effective date of this paragraph
7through July 15, 2015, a guarantee of 51% to 90% of the
8principal amount of the loan to assist with the financing of
9a project related to agriculture may be awarded by the board.
10The guarantee shall be subject to a one-time fee of 2% of the
11amount of the loan multiplied by the percentage of the
12guarantee.

13(3.2) The amount of a guarantee under this subsection,
14if any, shall be set at the discretion of the board based
15upon its determination of the potential financial risk to the
16Commonwealth.

17(4) The board may establish a subcommittee composed of
18one or more board members and department staff to supervise
19the progress of projects for which loan guarantees have been
20awarded under this section.

21(e.1) Limitation.--A Farm Credit Institution under the Farm
22Credit Act of 1971 (Public Law 92-181, 85 Stat. 583) shall only
23be permitted to participate in the First Industries Program
24established under this section and may not participate in any
25other loan guarantee program established under this chapter.

26(e.2) Sunset.--After July 15, 2015, no Farm Credit
27Institution under the Farm Credit Act of 1971 shall be eligible
28for any loan guarantees under this chapter.

29(f) Limitations.--

30(1) No more than $10,000,000 of the funds available for

1the program authorized by this section may be used for
2planning grants awarded under subsection (c).

3(2) At least two-thirds of the funds available for the
4program authorized by this section shall be used for
5financing of projects related to agriculture.

6§ 1553. Second Stage Loan Program.

7(a) Establishment.--There is established a program to be
8known as the Second Stage Loan Program. The program shall
9provide loan guarantees to commercial lending institutions that
10make loans to life sciences, advanced technology or
11manufacturing businesses.

12(b) Application for enrollment.--A commercial lending
13institution may apply for enrollment in the program authorized
14by this section. The application shall be on the form prescribed
15by the board and shall include or demonstrate all of the
16following:

17(1) The name and address of the commercial lending
18institution and the name and title of the individual who will
19serve as the point of contact for the commercial lending
20institution.

21(2) A statement defining the service area of the
22commercial lending institution.

23(3) A statement describing the commercial lending
24activities engaged in by the commercial lending institution
25and how the institution intends to expand those activities as
26a result of its participation in the program authorized by
27this section.

28(4) Any other information required by the board.

29(c) Enrollment approval.--Upon being satisfied that all
30requirements have been met, the board may enroll the commercial

1lending institution in the program authorized by this section,
2and, if enrolled, the authority shall execute a master guarantee
3agreement in favor of the commercial lending institution. In
4addition to any other terms and conditions required by the
5board, the master guarantee agreement shall provide for the
6following:

7(1) The procedure for the submission of a claim for
8payment by the commercial lending institution. This procedure
9shall require that the commercial lending institution
10demonstrate that it has exhausted all available remedies
11against the borrower, other guarantors and collateral for the
12loan before seeking payment under the agreement.

13(2) A requirement that a percentage of any moneys
14recovered by the commercial lending institution subsequent to
15any payment made under the master guarantee agreement by the
16authority be remitted to the authority.

17(3) Periodic reporting requirements by the commercial
18lending institution regarding itself and regarding the loans
19for which guarantee certificates have been issued under this
20section.

21(d) Application for guarantee.--A commercial lending
22institution enrolled in the program authorized by this section
23may submit an application to the authority for the guarantee of
24a proposed loan. The application shall be on the form prescribed
25by the board and shall include or demonstrate all of the
26following:

27(1) The name and address of the borrower, the type of
28business the borrower conducts, the location and age of the
29business and the names and addresses of the principals of the
30borrower.

1(2) The number of projected new or retained employees of
2the borrower as a result of the loan.

3(3) A copy of the borrower's last two years of financial
4statements prepared or reported on by an independent
5certified public accountant.

6(4) A statement describing the purpose of the loan, the
7requested amount of the loan, a copy of the commercial
8lending institution's commitment letter and applicable credit
9underwriting that supports the repayment of the loan, as well
10as the collateral and other guarantees offered by the
11borrower to support the loan.

12(5) Any other information required by the board.

13(e) Application review.--

14(1) The board shall review the application to determine
15all of the following:

16(i) That the borrower owns and operates a life
17sciences, advanced technology or manufacturing business.

18(ii) That the borrower's business has been in
19existence for at least two years but no more than seven
20years at the time of application.

21(iii) That the borrower is financially responsible
22and has the ability to repay the loan.

23(iv) That the use of loan proceeds by the borrower
24will result in jobs being created or retained within this
25Commonwealth.

26(v) That the borrower's business is located within
27the commercial lending institution's service area and
28within this Commonwealth.

29(vi) That the borrower and the commercial lending
30institution have met all other requirements established

1by the board.

2(2) Upon being satisfied that all requirements have been
3met, the board may approve the guarantee, and, if approved,
4the authority shall issue a guarantee certificate for the
5loan to the commercial lending institution stating the terms
6and amount of the guarantee.

7(3) The board may establish a subcommittee composed of
8one or more members of the board and staff of the department
9to review and approve applications for guarantees under this
10section.

11(f) Limitations.--

12(1) During the first two years of the term of a loan for
13which a guarantee certificate has been issued, the guarantee
14may not exceed 50% of the outstanding principal amount of the
15loan. From the end of year two through either the end of year
16seven or the end of the term of the loan, whichever occurs
17first, the guarantee may not exceed 25% of the outstanding
18principal amount of the loan. The guarantee will terminate at
19the end of seven years.

20(2) At no time may a guarantee exceed $1,000,000 for any
21one loan.]

22Section 4. Title 64 is amended by adding a chapter to read:

23CHAPTER 17

24PENNSYLVANIA BUSINESS DEVELOPMENT AUTHORITY

25Subchapter

26A. General Provisions

27B. Structure and Powers

28C. Bonds

29D. Accounts

30E. Programs

1F. Miscellaneous Provisions

2SUBCHAPTER A

3GENERAL PROVISIONS

4Sec.

51701. Scope of chapter.

61702. Construction.

71703. Findings and declaration of policy.

81704. Definitions.

9§ 1701. Scope of chapter.

10This chapter relates to the Pennsylvania Business Development
11Authority.

12§ 1702. Construction.

13(a) General rule.--This chapter shall be prudently construed
14in order to effect the legislative and public purposes as set
15forth in this subchapter.

16(b) Rights of obligees.--The provisions of this chapter
17providing for security, rights and remedies of obligees of the
18authority shall be prudently construed to achieve the public
19policy set forth in this subchapter.

20(c) Limitation.--If a provision of this chapter is judged to
21be invalid by a court of competent jurisdiction, the order or
22judgment shall be confined in its operation to the controversy
23in which it was rendered and shall not affect or invalidate a
24remaining provision of this chapter.

25§ 1703. Findings and declaration of policy.

26The General Assembly finds and declares as follows:

27(1) Many existing businesses in this Commonwealth could
28expand and become more competitive if provided with
29additional sources of financing for modernization, expansion
30and other capital needs. This, in turn, could increase

1employment levels, which would help to develop a stable and
2healthy economy and revitalize communities, thereby improving
3the health, safety and general welfare of the citizens of
4this Commonwealth.

5(2) A minimum level of unemployment and a maximum level
6of business opportunity can best be attained through the
7promotion, stimulation and revitalization of industrial,
8manufacturing, commercial, technological, agricultural and
9tourism activities in this Commonwealth. Through such
10efforts, the Commonwealth's competitiveness in the global and
11United States economies may be enhanced.

12(3) The Commonwealth has developed a great number of
13programs with the objective of furthering economic
14development within its borders. There have also been a
15correspondingly great number of boards and authorities to
16administer the various programs. While many of these economic
17development programs have been successful, others have fallen
18short.

19(4) The economic health of our communities will improve
20and efficiency and transparency will increase by eliminating
21programs that have not worked for this Commonwealth,
22consolidating the management of the successful programs that
23remain and adding new programs as needed.

24(5) The Pennsylvania Business Development Authority
25shall disburse the money for and administer the economic
26development programs encompassed in this chapter. It shall do
27so with the prudence, proficiency and transparency that the
28citizens of this Commonwealth expect, and will have as
29resources the expertise and administrative assistance of the
30Department of Community and Economic Development, as well as

1the other State agencies. Resources will be more accessible
2to businesses in this Commonwealth, citizens will be able to
3see where their tax dollars are being invested and the
4overall health of this Commonwealth's economy will improve,
5beginning in individual communities and spreading throughout
6this Commonwealth.

7§ 1704. Definitions.

8The following words and phrases when used in this chapter
9shall have the meanings given to them in this section unless the
10context clearly indicates otherwise:

11"Agricultural processor." An entity that adds value by
12subjecting one or more farm commodities to a process of
13manufacture, development or preparation for sale or a person
14that converts a farm product into a marketable form.

15"Agricultural producer." A person or entity involved in the
16management and use of an agricultural operation for the
17production of a farm commodity.

18"Agriculture." Any of the following:

19(1) the management and use of an agricultural operation
20for the production of a farm commodity;

21(2) the sale of farm commodities at wholesale;

22(3) the sale of farm commodities at retail by urban and
23rural supermarkets in underserved areas or farmers' markets;

24(4) energy-related activities impacting production
25agriculture; or

26(5) activities which implement best industry practices
27related to agricultural waste products, agriculture by-
28products or fertilizer.

29"Applicant." An eligible business or economic development
30organization that requests financial assistance from the

1authority.

2"Authority." The Pennsylvania Business Development Authority
3established in section 1711 (relating to authority).

4"Board." The board of the Pennsylvania Business Development
5Authority established in section 1712 (relating to board).

6"Bonds." Except where otherwise provided, bonds, notes,
7instruments, refunding notes and bonds and other evidences of
8indebtedness or obligations which the Pennsylvania Business
9Development Authority is authorized to issue or assume under
10this chapter.

11"Business." A corporation, partnership, sole proprietorship,
12limited liability company, business trust or other commercial
13entity.

14"Capital development project." The acquisition, development,
15construction, renovation or use of land, buildings, equipment
16and machinery and working capital by a business as part of:

17(1) A for-profit venture not of a mercantile or service-
18related nature, except for hospitality industry projects.

19(2) An effort to:

20(i) comply with Federal or State environmental laws
21or regulations;

22(ii) complete an approved remediation project; or

23(iii) adopt generally acceptable pollution
24prevention practices.

25(3) An effort to recycle municipal or commercial waste,
26or to use recycled municipal or commercial waste materials in
27manufacturing.

28(4) A for-profit project or venture to manufacture
29products to be exported out of the United States, which will
30increase this Commonwealth's market share.

1"Commercial lending activities." The making of loans and the
2provision of deposit services to business entities, except that
3a farm credit system institution under the Farm Credit Act of
41971 (Public Law 92-181, 85 Stat. 583) need not offer deposit
5services to qualify as a provider of commercial lending
6activities under this chapter.

7"Commercial lending institution." A federally chartered or
8State-chartered bank, savings bank, savings and loan association
9or farm credit system institution under the Farm Credit Act of
101971 (Public Law 92-181, 85 Stat. 583) which has a satisfactory
11rating from its primary regulator and which is engaged in
12commercial lending activities. The institution must operate at
13least one full-service branch for deposit gathering and lending
14located within this Commonwealth or be a farm credit system
15institution under the Farm Credit Act of 1971.

16"Commonwealth agency." An agency, authority or other
17instrumentality of the Commonwealth.

18"Community development financial institution." A community
19development financial institution certified in accordance with
20the Community Development Banking and Financial Institutions Act
21of 1994 (Public Law 103-325, 108 Stat. 2163).

22"Comprehensive county plan" or "comprehensive municipal
23plan." The comprehensive plan adopted under applicable law by a
24county, municipality, city of the first class or city of the
25second class.

26"Cost of the project" or "cost." Any of the following:

27(1) Costs and expenses of acquisition of interests in
28land, infrastructure, buildings, structures, equipment,
29furnishings, fixtures and other tangible or intangible
30property.

1(2) Costs and expenses of construction, reconstruction,
2erection, equipping, expansion, extension, improvement,
3installation, rehabilitation, renovation or repair of the
4buildings, structures and equipment.

5(3) Costs and expenses of demolishing, removing or
6relocating buildings or structures on lands acquired or to be
7acquired and the expense of acquiring land to which buildings
8or structures may be moved or relocated.

9(4) Costs and expenses of preparing land for
10development.

11(5) Costs and expenses incidental to determining the
12feasibility or practicality of the project, including
13engineering, legal and accounting and financial services, as
14well as any necessary studies or surveys.

15(6) Working capital or other capital needs related to
16the project.

17"Department." Except where otherwise provided, the
18Department of Community and Economic Development of the
19Commonwealth.

20"Distressed community." Any of the following:

21(1) An area which is designated a subzone, expansion
22subzone or improvement subzone under the act of October 6,
231998 (P.L.705, No.92), known as the Keystone Opportunity
24Zone, Keystone Opportunity Expansion Zone and Keystone
25Opportunity Improvement Zone Act.

26(2) Any other area designated as distressed according to
27standards adopted by the Pennsylvania Business Development
28Authority.

29"Economic development organization." A community development
30financial institution, an industrial development agency or a

1local development district that is certified by the authority as
2possessing the qualifications necessary to prepare, evaluate and
3approve applications to the authority for financial assistance.

4"Ex-Im Bank." The Export-Import Bank of the United States.

5"Exports." Goods or services to be sold or performed outside
6the United States.

7"Export business." Any for-profit corporation, limited
8liability company, partnership, proprietorship or other business
9entity involving export activities and employing 250 or fewer
10individuals.

11"Farm commodity." Any agricultural, horticultural,
12aquacultural, vegetable, fruit and floricultural product of the
13soil, livestock and meats, wools, hides, furs, poultry, eggs,
14dairy products, nuts, mushrooms, honey products and forest
15products.

16"Federal agency." The United States of America, the
17President of the United States, the Congress of the United
18States and any department, corporation, agency or
19instrumentality designated or established by the United States
20of America.

21"Financial assistance." Loans, guarantees, lines of credit,
22letters of credit and other financial arrangements which the
23Pennsylvania Business Development Authority is authorized to
24undertake under Subchapter E (relating to programs).

25"Governing body." The body or board authorized by law to
26enact ordinances or adopt resolutions for a political
27subdivision.

28"Hazardous substance." Any element, compound or material
29which is:

30(1) Regulated as a hazardous air pollutant under section

16.6 of the act of January 8, 1960 (1959 P.L.2119, No.787),
2known as the Air Pollution Control Act.

3(2) A hazardous waste, as defined under section 103 of
4the act of July 7, 1980 (P.L.380, No.97), known as the Solid
5Waste Management Act.

6(3) Regulated under the act of December 7, 1990
7(P.L.639, No.165), known as the Hazardous Material Emergency
8Planning and Response Act.

9"Hospitality industry project." A for-profit project or
10venture which involves a business that operates a hotel, motel
11or other lodging facility, or a restaurant or other food service
12operation that is open to the public.

13"Industrial development agency." A nonprofit organization
14which has as its purpose the promotion, encouragement,
15construction, development and expansion of new or existing
16industrial development projects.

17"Industrial development project." A project involving the
18acquisition or improvement of real property within this
19Commonwealth to be occupied and operated by any of the
20following:

21(1) An industrial enterprise.

22(2) A manufacturing enterprise.

23(3) A research and development enterprise.

24(4) An agricultural producer.

25(5) An agricultural processor.

26"Industrial enterprise." An enterprise other than a
27mercantile, commercial or retail enterprise which has created or
28will create substantial employment opportunities. The term may
29include warehouses, distribution and terminal facilities and
30office buildings utilized as national or regional headquarters

1or computer or clerical operations centers.

2"Industrial park project." A project sponsored by an
3economic development organization for the purpose of creating
4sites for the establishment of two or more industrial
5development projects.

6"Local development district." Multicounty economic and
7community development organizations established under the act of
8December 7, 1994 (P.L.845, No.120), known as the Local
9Development District Act, to provide regional planning and
10development services to improve the economy and quality of life
11in their respective regions through a variety of activities,
12including, but not limited to, the fostering of public and
13private partnerships and providing assistance to businesses.

14"Manufacturing enterprise." An enterprise which is engaged
15in the giving of new shapes, new qualities or new combinations
16to matter by the application of skill and labor.

17"Multiple-tenancy building project." A project sponsored by
18an economic development organization involving the acquisition
19or construction of any land, site, structure or facility for
20occupancy by two or more industrial enterprises, manufacturing
21enterprises, research and development enterprises, agricultural
22producers or agricultural processors, as those terms are defined
23in this chapter.

24"Municipal authority." A public authority created under 53
25Pa.C.S. Ch. 56 (relating to municipal authorities) or under the
26former act of May 2, 1945 (P.L.382, No.164), known as the
27Municipality Authorities Act of 1945.

28"Municipality." Any city, borough, town or township of the
29Commonwealth, each of which political subdivisions are separate
30incorporated municipalities of the Commonwealth for the purposes

1of this chapter.

2"Natural disaster." As defined in 35 Pa.C.S. § 7102
3(relating to definitions).

4"Normal agricultural operation." As defined in the act of
5June 10, 1982 (P.L.454, No.133), referred to as the Right-to-
6Farm Law.

7"Obligee of the authority." Any of the following:

8(1) A holder or owner of bonds of the Pennsylvania
9Business Development Authority, the Pennsylvania Industrial
10Development Authority or the Pennsylvania Minority Business
11Development Authority.

12(2) A trustee or other fiduciary for any holder or owner
13of bonds of the Pennsylvania Business Development Authority
14or its predecessors.

15(3) A provider of a letter of credit, policy of
16municipal bond insurance or other credit enhancement or
17liquidity facility for bonds of the Pennsylvania Business
18Development Authority or its predecessors.

19(4) A lessor or installment seller demising property to
20the Pennsylvania Business Development Authority or its
21predecessors in connection with a project.

22(5) A provider of an interest rate management agreement
23or other agreement or arrangement authorized under section
241714 (relating to powers).

25"Pennsylvania-related company." A business entity which has
26significant operations in this Commonwealth or which will, as a
27condition of any agreement under this chapter, locate
28significant business operations in this Commonwealth.

29"Philadelphia metropolitan statistical area." The
30Philadelphia, Pennsylvania, metropolitan division of the

1Philadelphia-Camden-Wilmington, Pennsylvania-New Jersey,
2Delaware-Maryland metropolitan statistical area as announced on
3June 6, 2003, by the United States Office of Management and
4Budget under standards for defining metropolitan and
5micropolitan statistical areas by the Office of Management and
6Budget for the 2000 decennial census of the United States Bureau
7of the Census as published in the Federal Register, Vol. 65, No.
8249, on December 27, 2000, comprising the Pennsylvania counties
9of Philadelphia, Delaware, Bucks, Montgomery and Chester.

10"Pollution control technology project." The acquisition,
11construction or installation of pollution control technology and
12equipment that enables an electric generating unit or
13cogeneration unit to meet any of the following requirements:

14(1) Mercury emission reductions.

15(2) The regulations adopted by the United States
16Environmental Protection Agency known as the Clean Air
17Mercury Rule codified at 40 CFR Pts. 60 (relating to
18standards of performance for new stationary sources), 72
19(relating to permits regulation) and 75 (relating to
20continuous emission monitoring).

21(3) Nitrogen oxides and sulfur dioxide emission
22reduction under 25 Pa. Code Chs. 121 (relating to interstate
23pollution transport reduction) and 145 (relating to general
24provisions).

25(4) The Clean Air Interstate Rule in 40 CFR Pt. 96
26(relating to NOX budget trading program and CAIR NOX and SO2
27trading programs for state implementation plans).

28"Predecessors." The Pennsylvania Industrial Development
29Authority or the Pennsylvania Minority Business Development
30Authority.

1"Private developer." A person or entity engaged in the
2development of real estate and determined by the Pennsylvania 
3Business Development Authority to be financially responsible to
4assume all obligations proposed to be undertaken.

5"Production agriculture." The management and use of a normal
6agricultural operation for the production of a farm commodity.

7"Project user." A person, political subdivision, municipal
8authority, Commonwealth agency or other entity that owns, leases
9or uses all or any part of a project.

10"Redevelopment authority." An entity created under the act
11of May 24, 1945 (P.L.991, No.385), known as the Urban
12Redevelopment Law.

13"Research and development enterprise." An enterprise for the
14discovery of new and the refinement of known substances,
15processes, products, theories and ideas. The term does not
16include enterprise activities directed primarily to the
17accumulation or analysis of commercial, financial or mercantile
18data.

19"Server." A device on a computer network that manages
20network resources, including devices to manage network traffic,
21store files or process database queries.

22"Server virtualization technology." The practice of hosting
23a software operating system within a virtual machine.

24"Site preparation project." The construction of water and
25sewer lines, storm water systems, excavation, construction of
26access roads, parking facilities, pipelines, transformers and
27utility transmission lines and traffic control devices.

28"Small business." An enterprise that employs fewer than 100
29persons, in the aggregate, on an annual basis.

30"Supermarket." A retail store operated on a self-service

1basis, primarily selling groceries, fresh produce, meat, bakery
2and dairy products. The term does not include a convenience
3store.

4"Tourism." Any activity that promotes or encourages
5individuals or a group of individuals to travel to a location
6within this Commonwealth to engage in an activity or service for
7pleasure that is unavailable at home.

8"Virtual machine." A self-contained software operating
9environment that operates within a host operating system server
10and simulates a hardware device, such as a computer or a server.

11"Working capital." Capital used by a business for
12operations, excluding fixed assets and production machinery and
13equipment.

14SUBCHAPTER B

15STRUCTURE AND POWERS

16Sec.

171711. Authority.

181712. Board.

191713. Duties.

201714. Powers.

211715. Operation, service and maintenance of a project or
22property.

23§ 1711. Authority.

24(a) Establishment.--There is established an authority to be
25known as the Pennsylvania Business Development Authority. The
26authority shall be an instrumentality of the Commonwealth and a
27body corporate and politic, with corporate succession.

28(b) Governance.--The authority shall be governed by the
29board. The powers of the authority shall be exercised by the
30board.

1(c) Indebtedness.--The authority may incur indebtedness,
2including through the issuance of bonds. The term of
3indebtedness shall not exceed 30 years. Net proceeds from the
4sale of obligations incurred under this chapter shall be
5allocated for programs under Subchapter E (relating to programs)
6and for the payment of all reasonable costs and expenses related
7to the issuance.

8(d) Expenses.--Expenses of the authority shall be paid from
9assets or income of the authority. Except as provided in this
10chapter or by other law, the Commonwealth shall not be
11responsible for funding the expenses of the authority.

12(e) Fiscal year.--The fiscal year of the authority shall be
13the same as the fiscal year of the Commonwealth.

14(f) Existence and dissolution.--

15(1) The authority shall exist until terminated by law.

16(2) The authority may be dissolved by law if all
17outstanding liabilities of the authority, including bonds and
18other contractual obligations, have been fully paid, retired,
19satisfied or discharged or provision has been made for
20payment of all outstanding liabilities of the authority,
21including bonds and other contractual obligations. Upon the
22dissolution of the authority, all funds, assets and other
23property of the authority shall vest in the Commonwealth.

24(g) Procurement.--The authority shall be considered as an
25executive agency for the purposes of 62 Pa.C.S. Pt. I (relating
26to Commonwealth Procurement Code), except that the authority
27shall have the authority to procure its own services. When
28acting as its own purchasing agency for the procurement of
29services, the authority shall use the procedures provided under
3062 Pa.C.S. Pt. I.

1(h) Commonwealth Attorneys Act.--The authority shall be
2considered an executive agency for the purposes of the act of
3October 15, 1980 (P.L.950, No.164), known as the Commonwealth
4Attorneys Act.

5(i) Relationship with department.--

6(1) The department shall provide administrative services
7and staff, including staff legal counsel, to the authority
8and the board. The authority shall reimburse the department
9for the costs of such services and staff.

10(2) The authority may enter into agreements with the
11department setting forth their respective rights and
12obligations in carrying out their respective duties under
13this chapter, as well as rates of reimbursement, as
14applicable, for providing services under this subsection.

15(j) Applicability.--The following acts shall apply to the
16authority and the board:

17(1) The act of July 19, 1957 (P.L.1017, No.451), known
18as the State Adverse Interest Act.

19(2) The act of February 14, 2008 (P.L.6, No.3), known as
20the Right-to-Know Law.

21(3) The provisions of 65 Pa.C.S. Chs. 7 (relating to
22open meetings) and 11 (relating to ethics standards and
23financial disclosure).

24§ 1712. Board.

25(a) Members.--

26(1) The authority shall be governed by a board
27consisting of 15 members.

28(2) The following public officials shall serve as
29members of the board:

30(i) The Secretary of Community and Economic

1Development.

2(ii) The Secretary of Agriculture.

3(iii) The Secretary of Banking.

4(iv) The Secretary of the Budget.

5(3) Eleven individuals from the private sector shall
6serve as members of the board. Members appointed under this
7paragraph shall not be members or staff of the General
8Assembly and shall not be otherwise employed by the
9Commonwealth. Seven members from the private sector shall be
10appointed by the Governor and one member shall be appointed
11by each of the following:

12(i) The President pro tempore of the Senate.

13(ii) The Minority Leader of the Senate.

14(iii) The Speaker of the House of Representatives.

15(iv) The Minority Leader of the House of
16Representatives.

17(b) Delegation of authority.--Public officials who are
18members of the board pursuant to subsection (a)(2) may designate
19a member of their staff to serve in their absence.

20(c) Terms.--

21(1) Public officials shall serve for the duration of
22their tenure in office.

23(2) Members appointed under subsection (a)(3) shall
24serve for terms of four years, subject to the pleasure of the
25appointing authority, except that board members appointed
26under subsection (a)(3)(i), (ii), (iii) and (iv) shall serve
27for initial terms of two years.

28(3) Members appointed to fill a vacancy created
29otherwise than by expiration of a term shall be appointed for
30the unexpired term of the preceding member.

1(d) Organization.--

2(1) The Governor shall appoint one member of the board
3to act as chairperson.

4(2) The members shall select from among themselves and
5staff of the department such other officers of the board as
6they shall determine.

7(e) Board action.--

8(1) The board shall meet at the call of the chairperson.

9(2) Eight members of the board shall constitute a
10quorum. When a quorum is present, a majority of those present
11shall be necessary to take any action on behalf of the
12authority.

13(f) Compensation.--Members of the board shall be entitled to
14no compensation for their services, but shall be entitled to
15reimbursement for all necessary and reasonable expenses incurred
16in connection with the performance of their duties as members of
17the board.

18(g) Fiduciary relationship.--The members of the board and
19the professional personnel of the board shall stand in a
20fiduciary relationship with the Commonwealth and the authority
21as to the moneys in the accounts of the authority and
22investments of the authority.

23(h) Standard of care.--The members of the board, in
24performance of their duties under this chapter, shall exercise
25the standard of care required by 20 Pa.C.S. Ch. 73 (relating to
26municipalities investments).

27(i) Liability.--Members of the board shall not be liable
28personally on any obligations of the authority, including bonds
29of the authority.

30(j) Definition.--As used in this section, the term "member"

1means an individual who serves on the board under subsection (a)
2as a public official or an individual from the private sector.

3§ 1713. Duties.

4(a) General rule.--The authority shall:

5(1) Administer the programs described in Subchapter E
6(relating to programs).

7(2) Fund the programs described in Subchapter E using
8the resources available under this chapter.

9(3) Adopt bylaws.

10(4) Adopt and publish guidelines for each program listed
11in Subchapter E as proposed by the department and for the
12certification of economic development organizations.
13Guidelines shall include applicable policies and procedures,
14criteria, application requirements and any other necessary
15and relevant information.

16(5) Certify on an annual basis those economic
17development organizations that possess the qualifications
18necessary to evaluate and approve applications to the
19authority for financial assistance.

20(b) Reports and publications.--

21(1) Within 90 days of the effective date of this
22chapter, the authority shall submit for publication in the
23Pennsylvania Bulletin and on the Internet website of the
24department notification of the programs to be administered
25under this chapter. The notification shall include the name
26and brief description of each program, the name of a contact
27person and the anticipated time that funding, applications
28and official guidelines will become available.

29(2) The authority shall submit for publication in the
30Pennsylvania Bulletin the program guidelines adopted under

1subsections (c) and (d) and shall maintain the guidelines on
2the department's Internet website.

3(3) The authority shall, each year by the first day of
4March, publish and deliver to the Governor and the General
5Assembly a memorandum which shall outline the authority's
6goals and planned investments for the coming fiscal year.

7(4) The authority shall annually post and maintain on
8the Internet website of the department an annual report,
9which at a minimum shall include:

10(i) A list of all applications approved during the
11previous fiscal year.

12(ii) The name and business address of each
13recipient.

14(iii) The amount and terms of the assistance.

15(iv) A brief description of the project for which
16the assistance was awarded. The description shall include
17the commitment for the number of jobs created and
18retained and the total capital investment for the
19project.

20(c) Audit.--

21(1) The authority shall have the accounts and books of
22the authority audited annually by an independent certified
23public accounting firm.

24(2) The authority shall, by December 31 of each year,
25file a copy of the audit required by paragraph (1) with the
26Secretary of the Senate, the Chief Clerk of the House of
27Representatives and the Office of the Budget.

28(d) Cooperation.--The authority shall cooperate with the
29Office of Inspector General in the performance of its duties,
30including, but not limited to, the investigation of fraud,

1waste, misconduct or abuse in the programs, operations or
2contracting of the authority.

3§ 1714. Powers.

4The authority may:

5(1) Borrow money, issue and assume bonds, obtain lines
6and letters of credit, provide loan guarantees and incur
7debt.

8(2) Sue and be sued, implead and be impleaded,
9interplead, complain and defend in any court.

10(3) Establish new economic development programs and the
11corresponding accounts necessary or desirable for its
12corporate purposes.

13(4) Transfer funds among its accounts as necessary and
14desirable to effectuate the purposes of the programs set
15forth in Subchapter E (relating to programs).

16(5) Retain accountants, auditors and financial experts
17to render services and engage the services of other advisors,
18consultants and agents as necessary.

19(6) Acquire, accept, purchase, receive, collect, hold,
20convey and invest funds and property, whether tangible or
21intangible, from all sources, directly or by assignment,
22pledge or otherwise.

23(7) Invest money of the authority not required for
24immediate use, including proceeds from the sale of bonds, as
25the board determines, subject to any agreement with
26bondholders stated in the authorizing resolution providing
27for the issuance of bonds.

28(8) Contract and execute all instruments, including
29financing agreements, letter of credit agreements, liquidity
30agreements, guarantees, sureties, mortgages, loans, standby

1loan commitments and contracts of insurance which are
2necessary or appropriate for carrying on the business of the
3authority.

4(9) Impose and collect charges in connection with loan
5commitments and servicing, including reimbursement of costs
6of financing.

7(9.1) Impose interest rate penalties on borrowers who
8fail to fulfill commitments regarding job creation or
9retention, private investment and site location.

10(10) Pledge the credit of the authority and provide
11security and liquidity to obligees of the authority as the
12authority deems necessary or appropriate.

13(11) Use or pledge an account for a special purpose,
14including debt service reserves and other reserves, as may be
15necessary or desirable to carry out its powers and duties.

16(12) With the advice of a financial management firm
17selected by the board, negotiate and enter into interest rate
18cap agreements, interest rate management agreements, collar
19agreements, corridor agreements, ceiling agreements, floor
20agreements, forward agreements, float agreements and other
21similar arrangements which, in the judgment of the authority,
22will assist the authority in managing the interest costs of
23the authority.

24(13) Provide interest revenue-sharing on a quarterly
25basis to the originating economic development organization on
26loans sponsored by the economic development organization to
27offset administrative expenses and the cost of fulfilling
28certification obligations.

29(14) Use moneys, excluding the proceeds of bonds, to pay
30the administrative expenses of the authority and of the

1department incurred under this chapter.

2(15) Employ an executive director.

3(16) Employ legal counsel and provide a reimbursement
4agreement for legal services by legal counsel for the
5Department of Community and Economic Development.

6(17) Adopt, use and alter a corporate seal.

7(18) Pay or satisfy obligations of the authority.

8(19) Negotiate modifications or alterations to financing
9agreements, mortgages or security interests.

10(20) Foreclose on a mortgage or security interest in
11default.

12(21) Commence any action necessary to protect or enforce
13any right conferred upon the authority by law, mortgage,
14security agreement, contract or other agreement.

15(22) Bid for or purchase property that was the subject
16of a mortgage or security interest at a foreclosure or other
17sale and acquire and take possession of that property.

18(23) Sell, mortgage, pledge, encumber, transfer, convey
19and dispose of any property, whether tangible or intangible.

20(24) Acquire and sell loans, mortgages and security
21interests at public or private sale.

22(25) Provide financial assistance to applicants and
23project users.

24(26) Agree to and comply with conditions attached to
25Federal or Commonwealth assistance not inconsistent with the
26provisions of this chapter.

27(27) Make rules regarding the operation of properties
28and facilities of the authority subject to agreements with
29obligees of the authority.

30(28) Develop, adopt and implement binding policies or

1guidelines assuring that all persons are accorded equal
2opportunity in employment and contracting associated with the
3programs established under Subchapter E. This paragraph
4includes the authority's contractors, subcontractors,
5assignees, lessees, agents, vendors and suppliers.

6(29) Exercise rights provided by law for the benefit or
7protection of the authority or obligees of the authority.

8(30) Procure insurance against any loss in connection
9with its programs, property and other assets.

10(31) Promulgate regulations and adopt guidelines and
11statements of policy containing restrictions as it may deem
12necessary and appropriate to effectuate the public purposes
13of this chapter.

14(32) Enter into agreements with applicants and project
15users providing, among other things, for any of the
16following:

17(i) Financial assistance.

18(ii) Loan, rental or purchase price payments or
19other payments, sufficient to amortize the principal,
20interest and premium, if any, of bonds and contractual
21obligations of the authority incurred to provide funds to
22pay the costs of the projects being financed.

23(iii) The applicants or project users to pay or
24cause to be paid all other costs of acquiring,
25constructing, maintaining and operating the projects
26being financed.

27(iv) Financial assistance to an economic development
28organization to fund a revolving loan fund created by the
29economic development organization for projects that are
30eligible for financing by the authority.

1(v) Conveyance with or without consideration of any
2part or all of a project being financed to the project
3user or applicant on or before payment of all bonds and
4contractual obligations of the authority incurred with
5respect to the project.

6(vi) Other matters as are customary or as are deemed
7necessary and appropriate by the authority.

8(33) Undertake any action appropriate or necessary to
9effectuate the purposes of this chapter, or to exercise the
10powers set forth in this section, including any act
11reasonably implied from those powers.

12Before a new policy or a change of policy takes effect, the
13board shall first approve it by a vote.

14§ 1715. Operation, service and maintenance of a project or
15property.

16The authority shall not approve an application or finance a
17project if it would be required to operate, service or maintain
18the project. The authority may operate, service or maintain a
19property in foreclosure or default.

20SUBCHAPTER C

21BONDS

22Sec.

231721. Bond issuance.

241722. Commonwealth and local taxation.

251723. Federal taxation.

261724. Validity of bonds, limitation on actions.

271725. Provisions of bonds and trust agreements and issuance of
28bonds.

291726. Validity of pledge.

301727. Commonwealth pledges.

11728. Bonds to be legal investments.

21729. Rights and remedies of obligees.

3§ 1721. Bond issuance.

4(a) Authorization.--The authority may issue limited
5obligation revenue bonds and other types of limited obligation
6revenue financing. Bonds of the authority shall be authorized by
7a resolution of the board, subject to subsection (c).

8(b) Taxability.--The authority may issue both tax-exempt
9bonds and taxable bonds to fund the authority's programs.

10(c) Bond requirements.--Bonds issued by the authority shall:

11(1) Be of a series.

12(2) Bear a date or dates.

13(3) Be in denominations.

14(4) Be signed by, or bear the facsimile signature of the
15officer designated by the board.

16(5) Carry registration, exchangeability and
17interchangeability privileges.

18(6) Be payable in any medium of payment and at any place
19or places.

20(7) Mature on a date or dates not to exceed 30 years
21from the original issue date.

22(8) Be subject to terms of redemption, if any.

23(d) Issuance.--Bonds issued by the authority may:

24(1) Be authenticated by an authenticating agent, fiscal
25agent or trustee.

26(2) Be in any form, either coupon or fully registered
27without coupons, or in certificated or book-entry-only form.

28(3) Bear or accrue interest at any rate or rates,
29whether fixed or variable.

30(4) Be issued and delivered notwithstanding the fact

1that the officer whose signature appears on a coupon may no
2longer be an authenticating officer at the time of actual
3delivery.

4(e) No debt or liability of the Commonwealth.--

5(1) A bond issued by the authority shall not be a debt
6or liability of the Commonwealth and shall not create any
7indebtedness, liability or obligation on the part of the
8Commonwealth.

9(2) A bond shall be payable solely from revenues of the
10authority or accounts pledged or otherwise available for
11their repayment.

12(3) A bond shall contain on its face statements that:

13(i) The authority is obligated to pay the principal
14of or interest on the bond only from revenues, receipts
15or funds pledged or available for its payment as
16authorized in this chapter.

17(ii) Neither the Commonwealth nor any political
18subdivision is obligated to pay the principal or
19interest.

20(iii) Neither the faith and credit nor the taxing
21power of the Commonwealth or any political subdivision is
22pledged to the payment of the principal of or interest on
23the bonds.

24(f) Sale.--Bonds may be sold at a public, invited or private
25sale at a price determined by the authority.

26(g) Interim receipts.--Pending the preparation of the
27definitive bonds, interim receipts may be issued to the
28purchaser or purchasers of the bonds and shall contain the terms
29and conditions established by the authority.

30(h) Negotiable instruments.--Bonds of the authority shall

1have the qualities of negotiable instruments under 13 Pa.C.S.
2(relating to commercial code).

3(i) Use.--The authority may, as it deems necessary and
4desirable, use the proceeds of bonds to:

5(1) provide financial assistance;

6(2) purchase loans, mortgages, security interests or
7loan participations;

8(3) pay incidental expenses in connection with activity
9under paragraphs (1) and (2), including administrative costs
10of the authority and the department;

11(4) pay expenses of authorizing and issuing the bonds;

12(5) pay principal, redemption or purchase price and
13interest on bonds; or

14(6) fund reserves.

15(j) Refunding.--Subject to the provisions of this chapter,
16terms of bonds and any contracts entered into pursuant to this
17chapter, the authority may refund any outstanding debt of the
18authority whether the debt represents principal or interest, in
19whole or in part, at any time. For the purposes of this
20subsection, the term "refund" means the issuance and sale of
21obligations the proceeds of which are used or are to be used for
22the payment or redemption of outstanding obligations upon or
23prior to maturity.

24§ 1722. Commonwealth and local taxation.

25(a) Authority.--Because the authority, as a public
26instrumentality of the Commonwealth, will be performing
27essential governmental functions in effectuating the purposes of
28this chapter, the authority shall not be subject to State or
29local taxation or assessment upon any property acquired or used
30or permitted to be used by the authority for its purposes.

1(b) Bonds.--Bonds issued by the authority, the transfer and
2the income from the bonds, including any profit made on the sale
3of such bonds, shall be free from State and local taxation
4within this Commonwealth. The exclusion under this subsection
5shall not extend to gift, estate, succession or inheritance
6taxes, or any other taxes not levied or assessed directly on the
7bonds, their transfer, the income from the bonds or the
8realization of profits on their sale.

9§ 1723. Federal taxation.

10(a) Allocation.--If the bonds issued by the authority for a
11project are tax-exempt bonds for which Federal law requires an
12allocation, the department may issue an allocation upon receipt
13of a written request by the authority. An allocation must be
14issued by the department prior to the approval of the resolution
15authorizing the issuance of the bonds by the authority.

16(b) Approval.--If gubernatorial approval is required by
17Federal or State law, the Governor may approve the issuance of
18bonds upon receipt of written request for approval from the
19authority. The written request must contain all of the
20following, to the extent required by Federal law:

21(1) A statement that the authority has conducted a
22public hearing, with appropriate public notice, concerning
23the purposes for which the bonds are to be issued.

24(2) A description of the project or projects to be
25financed.

26(3) A description of the method of financing the project
27or projects.

28(4) A summary of the comments made and questions posed
29at the public hearing.

30§ 1724. Validity of bonds, limitation on actions.

1(a) Presumption.--Bonds reciting in substance that they have
2been issued by the authority to accomplish the public purposes
3of this chapter shall be conclusively deemed in any suit, action
4or proceeding involving the validity or enforceability of the
5bonds or their security to have been issued for the public
6purposes of this chapter.

7(b) Estoppel.--After issuance, bonds shall be conclusively
8presumed to be fully authorized and issued under the laws of
9this Commonwealth, and any person shall be estopped from
10questioning their validity, sale, execution or delivery by the
11authority.

12§ 1725. Provisions of bonds and trust agreements and issuance
13of bonds.

14(a) Provisions.--A resolution authorizing the issuance of
15bonds or any trust agreement approved in or by a resolution
16authorizing the issuance of bonds may contain provisions which
17do any of the following:

18(1) Secure the bonds.

19(2) Establish a covenant as to any of the following:

20(i) Additional bonds to be issued and terms,
21conditions and limitations on such bonds.

22(ii) Rank or priority of bonds with respect to liens
23or security interests.

24(iii) Limitations on the authority's right to sell,
25pledge or otherwise dispose of bonds or notes of
26governmental units, loan agreements or other property.

27(iv) Custody, application, investment and
28disposition of proceeds of bonds.

29(v) Incurring of other debts or obligations by the
30authority.

1(vi) Payment of principal of or interest on bonds.

2(vii) Sources and methods of payment.

3(viii) Redemption, purchase and tender of bonds by
4the authority or the bondholders and the privilege of
5exchange of the bonds for other bonds.

6(ix) Use, investment and disposition of the money
7held in special funds, accounts or reserves.

8(x) Use of any or all of the authority's real or
9personal property.

10(xi) Warrant of title to the authority's real or
11personal property.

12(xii) Pledging or granting a security interest in
13all or any part of the authority's revenues or any part
14of its property to which its right or title exists or
15which may later come into existence.

16(3) Establish a covenant against any of the following:

17(i) Permitting or suffering any lien on all or any
18part of its revenues or property.

19(ii) Extending the time for the payment of bonds or
20interest.

21(4) Provide for any of the following:

22(i) Replacement of lost, stolen, destroyed or
23mutilated bonds.

24(ii) Maintenance of the authority's real and
25personal property.

26(iii) Replacement of the authority's real and
27personal property.

28(iv) Insurance to be carried on the authority's real
29and personal property and the use and disposition of the
30insurance proceeds.

1(v) Rights, liabilities, powers and duties arising
2upon the breach of any covenant, condition or obligation.

3(vi) Letters of credit, bond insurance and other
4facilities for credit enhancement and liquidity.

5(5) Prescribe:

6(i) Procedures, if any, by which the terms of any
7contract with bondholders may be amended or abrogated.

8(ii) The percentage of the principal amount of bonds
9the holders of which must consent to the amendment or
10abrogation of any contract.

11(iii) The manner in which the consent under
12subparagraph (ii) may be given.

13(iv) Events of default.

14(v) Terms and conditions upon which any or all of
15the bonds become or may be declared due and payable
16before stated maturity following an event of default.

17(vi) Terms and conditions upon which the declaration
18of default and its consequence may be waived.

19(6) Create or authorize the creation of special funds or
20accounts to be held in trust or otherwise for the benefit of
21bondholders or of reserves for debt service or other
22purposes.

23(7) Vest in a trustee any property, rights, powers and
24duties in trust for the benefit of bondholders.

25(8) Limit the rights, powers and duties of a trustee,
26and the right of bondholders to appoint a trustee.

27(9) Establish the terms and conditions upon which a
28trustee or the bondholders may enforce a covenant or rights
29securing or relating to the bonds.

30(10) Exercise all or any part or combination of the

1powers granted in this chapter.

2(11) Do or refrain from doing any other act and thing
3necessary, convenient or desirable in order to better secure
4the bonds of the authority or, in the absolute discretion of
5the authority, as will tend to make bonds of the authority
6more marketable. This paragraph applies notwithstanding that
7the covenant, act or thing may not be specifically enumerated
8in this chapter as long as the covenant, act or thing is in
9accordance with the intent of this chapter.

10(12) Pay the costs or expenses incident to any of the
11foregoing.

12(b) Issuance of bonds.--Bonds may be issued under one or
13more separate resolutions or trust agreements. A series of bonds
14may be separately secured from another series of bonds under the
15resolutions or trust agreements.

16§ 1726. Validity of pledge.

17A pledge of or grant of a security interest in revenues or
18instruments made by the authority shall be valid and binding
19from the time when the pledge is made or, where applicable, when
20the authority enters into a written agreement to request the
21applicable appropriation from the department. The revenues,
22receipts, money, funds or other property or instruments pledged
23and later received by the authority shall immediately be subject
24to the lien of the pledge or security interest without any
25physical delivery of the property pledged or further act. The
26lien of the pledge or security interest shall be valid and
27binding as against all parties having claims of any kind in
28tort, contract or otherwise against the authority irrespective
29of whether the parties have notice of the lien, pledge or
30security interest. No instrument by which a pledge or security

1interest is created, evidenced or noticed need be recorded or
2filed to perfect the pledge or security interest except in the
3records of the authority.

4§ 1727. Commonwealth pledges.

5(a) Bondholders.--The Commonwealth pledges to and agrees
6with each obligee of the authority that the Commonwealth will
7not limit or alter the rights and powers vested in the authority
8or otherwise created by this chapter in any manner inconsistent
9with the obligations of the authority to its obligees until all
10bonds at any time issued, together with the interest on the
11bonds, are fully paid and discharged.

12(b) Lessees.--The Commonwealth pledges and agrees with any
13person that, as owner of property which is leased or subleased
14to or from the authority, it will not limit or alter the rights
15and powers vested in the authority or otherwise created by this
16chapter in any manner which impairs the obligations of the
17authority until all the obligations of the authority under the
18lease or sublease are fully met and discharged.

19§ 1728. Bonds to be legal investments.

20(a) Investments.--Bonds issued pursuant to this chapter
21shall constitute securities in which any person or entity may
22properly and legally invest funds, including capital, deposits
23or other funds in their control or belonging to them.

24(b) Deposits.--Bonds issued by the authority are securities
25which may properly and legally be deposited with and received by
26a government agency for any purpose for which the deposit of
27bonds or other obligations of the Commonwealth are authorized by
28law.

29§ 1729. Rights and remedies of obligees.

30The rights and remedies conferred upon or granted to obligees

1of the authority pursuant to this chapter shall be in addition
2to and not in limitation of rights and remedies lawfully granted
3to obligees of the authority by the resolution providing for the
4issuance of bonds or by any trust agreement or other agreement
5under which the bonds may be issued or secured.

6SUBCHAPTER D

7ACCOUNTS

8Sec.

91731. Establishment of accounts.

101732. Deposits.

111733. Use.

121734. Account restrictions.

13§ 1731. Establishment of accounts.

14In addition to other accounts that may be established by the
15authority from time to time, there are established the following
16accounts:

17(1) The Small Business First Account.

18(2) The Community Economic Development Account.

19(3) The Export Financing Account.

20(4) The Pennsylvania Industrial Development Account.

21(5) The Machinery and Equipment Loan Account.

22(6) The Disadvantaged Business Development Account.

23(7) The First Industries Account.

24(8) The Second Stage Loan Guarantee Account.

25§ 1732. Deposits.

26Loan repayments, recaptured funds and bond proceeds from the
27programs described in Subchapter E (relating to programs), as
28well as appropriations, including, without limitation, those
29appropriations made prior to the effective date of this act for
30the same programs or similar programs to those described in

1Subchapter E and any other available funds which are or may
2become available, not pledged to be deposited or used elsewhere,
3shall be deposited in the respective program accounts. Separate
4subaccounts may be established in each program account for
5purposes of pledging funds in the subaccounts to secure specific
6bonds and other obligations of the authority.

7§ 1733. Use.

8Funds deposited in each of the program accounts shall be made
9available for additional loans, guarantees and other financing
10tools as provided by the respective programs.

11§ 1734. Account restrictions.

12(a) Pennsylvania Industrial Development Account.--

13(1) The Pennsylvania Industrial Development Account,
14established in section 1731 (relating to establishment of
15accounts), shall be a revolving fund, whereby all
16appropriations and payments made into the account, including
17repayment of loans or funds from mortgages and any other
18agreements made and entered into by the authority under the
19program, shall be applied and reapplied to the purposes of
20the Pennsylvania Industrial Development Program.

21(2) If at any time the authority determines that funds
22held in the Pennsylvania Industrial Development Account
23exceed the amount required to carry out the purposes of the
24program, the authority shall take such action as may be
25required to transfer the excess funds to the General Fund of
26the State Treasury, subject to the provisions of section
271771.1 (relating to transfer from Pennsylvania Industrial
28Development Authority to Pennsylvania Business Development
29Authority).

30(b) Export Financing Account.--Funds in the Export Financing

1Account must be continuously secured by a pledge of direct
2obligations of the United States or of the Commonwealth having
3an aggregate market value, exclusive of accrued interest, at
4least equal to the balance on deposit in the account. The
5securities shall be deposited with the authority to be held by a
6trustee or agent satisfactory to the authority. Bank and trust
7companies are authorized to give security under this subsection.

8SUBCHAPTER E

9PROGRAMS

10Sec.

111750. Programs generally.

121751. Small Business First Program.

131752. Community Economic Development Program.

141753. Export Financing Program.

151754. Pennsylvania Industrial Development Program.

161755. Machinery and Equipment Loan Program.

171756. Disadvantaged Business Development Program.

181757. First Industries Program.

191758. Second Stage Loan Guarantee Program.

20§ 1750. Programs generally.

21(a) Establishment of programs.--In addition to the programs
22described in this subchapter, the authority may from time to
23time establish new programs that further economic development
24within this Commonwealth.

25(b) Application process.--Applications for financial
26assistance under this chapter must be prepared with the
27assistance of a certified economic development organization that
28shall approve the application before it is submitted to the
29authority and shall comply with subsection (c) and with any
30additional requirement of the applicable program or programs.

1Applications shall be in the form required by the authority and
2shall bear the applicant's name and address together with a
3description of the type and amount of financial assistance
4requested. Upon review of an application, the authority shall
5notify the applicant of its decision or request additional
6information or certifications prior to making its decision.

7(c) Application requirements.--Applications shall include
8the following information, where applicable:

9(1) A description of the applicant's business or, if the
10applicant is not the borrower, the borrower's business,
11including:

12(i) The type of business conducted.

13(ii) The location and age of the business.

14(iii) A list of all offices of the applicant located
15in this Commonwealth.

16(iv) The names and addresses of the principals.

17(v) The number of current employees and an estimate
18of future employment.

19(2) A description of the project, including:

20(i) The location.

21(ii) The total estimated project cost, prepared by
22an engineer or other qualified professional, where
23appropriate, and the identification of all sources of
24capital for the project.

25(iii) A legal description of all real property held
26or to be acquired for the establishment of the project.

27(iv) A general description and statement of value of
28any real or personal property of the applicant and, if
29applicable, the buyer or tenant of the project, to be
30applied to the establishment of the project.

1(3) A statement that the project is consistent with any
2existing comprehensive county plan where the project is
3located.

4(4) A firm commitment from the intended project user to
5use the project upon completion.

6(5) A brief description of the anticipated economic
7impact to this Commonwealth and the host municipality as a
8result of the project.

9(6) Any plans and other documents as may be required to
10show the type, structure and general character of the
11project.

12(7) Financial statements of the applicant, proposed
13guarantors and any other party whose credit is significant to
14the approval of the financial assistance. The authority may
15by guideline specify the period to be covered by the
16financial statements and whether they must be compiled,
17reviewed or prepared by a certified public accountant.

18(8) Any information required by the program or programs
19under which financial assistance may be provided.

20(9) Any other information required by the authority.

21(d) Review and approval.--

22(1) In reviewing applications, the authority shall
23consider the following, where applicable:

24(i) Whether the value of the proposed collateral and
25the financial resources offered by the applicant are
26sufficient to repay the loan.

27(ii) Whether the project will enable future
28employment opportunities in or have a net positive
29economic impact on the surrounding community.

30(iii) Whether the statement of the estimated cost of

1the project is reasonable.

2(iv) Whether the sources of financial commitments
3for funds in excess of the amount requested under this
4chapter are reliable.

5(v) Whether the applicant has complied with terms
6required by the applicable program or programs listed
7under the corresponding sections of this chapter.

8(vi) Whether the applicant has a history of
9investment in Pennsylvania-related companies.

10(vii) Whether the applicant has demonstrated strong
11relationships with organizations in this Commonwealth
12which foster economic development.

13(viii) Whether the applicant has a strong
14performance record.

15(ix) Whether the applicant has demonstrated an
16ability to meet and satisfy debt service, if applicable,
17as it becomes due and payable.

18(x) Any other information deemed relevant by the
19authority.

20(2) Subject to any applicable limitations under this
21chapter, the amount, duration, interest rate, security
22required and any other terms of the loan shall be set at the
23discretion of the authority based upon its determination of
24the potential financial risk to the Commonwealth.

25(3) No financial assistance shall be approved if the
26proceeds would be used to:

27(i) refinance any portion of the total cost of a
28capital development project, pollution prevention
29infrastructure or other existing loans or debt;

30(ii) finance a project located outside the

1geographic boundaries of this Commonwealth;

2(iii) relocate a business to another part of this
3Commonwealth, unless approved in advance by the authority
4which shall consider the negative economic impact on the
5community that the business is leaving; or

6(iv) provide funds, directly or indirectly, for
7payment distribution or as a loan to owners, partners or
8shareholders of a small business, except as ordinary
9compensation for services rendered.

10(4) (i) The terms of all agreements for financial
11assistance awarded under this chapter shall include any
12material terms, requirements or other conditions provided
13for agreements entered into under this chapter. The
14authority may impose other terms and conditions if it
15determines they are in the best interests of this
16Commonwealth, including a provision requiring collateral
17for any penalty which may be imposed.

18(ii) Upon approving an application for a loan, the
19authority shall draw an advance equal to the principal
20amount of the loan from the appropriate account or
21accounts; and prior to providing loan funds to the
22applicant, the authority shall require the applicant to
23execute a note and to enter into a loan agreement and any
24other agreement as the authority shall require.

25(e) Reporting and inspection.--An applicant for or a
26recipient of financial assistance made under this chapter shall,
27upon request:

28(1) Permit the authority to inspect its premises, books
29and records.

30(2) Provide updated information to the authority if

1conditions change to the extent that the information
2originally given becomes inaccurate or misleading.

3(3) Provide the authority with any periodic financial
4reports and audits that the authority may require.

5§ 1751. Small Business First Program.

6(a) General rule.--The Small Business First Program shall
7provide low-interest loans and lines of credit to small
8businesses for capital development projects that will stimulate
9the expansion and assist in the viability of small businesses,
10thereby creating new jobs and retaining existing jobs in this
11Commonwealth.

12(b) Application.--In addition to the requirements listed in
13section 1750(b) (relating to programs generally), the
14application shall include the following:

15(1) A description of the capital development project,
16including the following:

17(i) The number of employment opportunities to be
18created or preserved by the proposed capital development
19project.

20(ii) If the applicant is an agricultural producer, a
21demonstration that there is a substantial likelihood that
22the project will enhance the agricultural operation.

23(2) A financial commitment from a responsible source for
24any cost of the project in excess of the amount requested.

25(3) A demonstration of the ability of the applicant to
26meet and satisfy the debt service as it becomes due and
27payable.

28(4) The existence and sufficiency of collateral for the
29loan.

30(c) Conditions and restrictions.--A loan made under this

1section may:

2(1) Finance the development, construction, renovation or
3acquisition of land, buildings, machinery or equipment,
4licenses for wholesalers and distributors to sell alcoholic
5beverages or may be used for working capital.

6(2) Not exceed 50% of the total capital development
7project costs. For the purposes of this paragraph, capital
8development project costs incurred during the 12-month period
9prior to the date of submission of the application to the
10authority shall be considered part of the total capital
11development project costs.

12(d) Loan terms.--The following terms shall apply:

13(1) A loan for real property shall have a repayment
14period of up to 15 years.

15(2) A loan for machinery and equipment shall have a
16repayment period of up to ten years.

17(3) A loan or line of credit for working capital shall
18have a repayment period of up to three years.

19(4) If, in a capital development project, two or more
20uses are planned, the loan terms may be combined.

21(5) The interest rate shall be determined by the
22authority.

23(6) The authority shall determine the job retention or
24job creation requirements of each project financed in whole
25or in part through a loan made under this section.

26(7) All loans shall be secured by lien positions on
27collateral at the highest level of priority, as determined by
28the authority.

29(e) Penalty for noncompliance.--In the event that a loan
30recipient fails to create or preserve the number of employment

1opportunities specified in the approved application, the
2authority may impose a penalty equal to an increase of up to 5%
3above the existing loan interest rate for the remainder of the
4loan, unless it determines that the failure is due to
5circumstances outside the control of the loan recipient.

6§ 1752. Community Economic Development Program.

7(a) General rule.--The Community Economic Development
8Program shall provide loans for small businesses located in
9distressed communities which are involved in the business-to-
10public service, mercantile, commercial or point-of-sale retail
11sectors in order to enhance the economic well-being of the
12community by employing residents of the community and by
13providing products or services to that community.

14(b) Conditions and restrictions.--The following shall apply:

15(1) A loan for land, buildings, machinery, equipment or
16working capital may not exceed 50% of the total capital
17development project costs. For the purposes of this
18paragraph, capital development project costs incurred during
19the 12-month period prior to the date of submission of the
20application to the authority shall be considered part of the
21total capital development project costs.

22(2) Each capital development project shall meet the job
23retention or job creation requirements established by the
24authority.

25(3) The maximum loan amount available under this program
26will be set by the authority.

27(4) No loans shall be approved if the proceeds of the
28loan would be used to provide funds for speculation in real
29or personal property, whether tangible or intangible.

30(c) Loan terms.--The following terms shall apply:

1(1) A loan for real property shall have a repayment
2period of up to 15 years.

3(2) A loan for machinery and equipment shall have a
4repayment period of up to ten years.

5(3) A loan or line of credit for working capital shall
6have a repayment period of up to three years.

7(4) All loans shall be secured by lien positions on
8collateral at the highest level of priority, as determined by
9the authority.

10(d) Application.--In addition to the requirements listed in
11section 1750(b) (relating to programs generally), the
12application shall include the following:

13(1) A financial commitment from a responsible source for
14the cost of the capital development project in excess of the
15amount requested.

16(2) A demonstration that the capital development project
17will have a direct impact on the community in which the
18capital development project is or will be located, on
19residents of that community or on the local and regional
20economy. The authority shall establish criteria that will
21assist in making this demonstration.

22(3) A projection of the number of employment
23opportunities to be created or preserved by the proposed
24capital development project.

25(e) Penalty for noncompliance.--In the event that a loan
26recipient fails to create or preserve the number of employment
27opportunities specified in the approved application, the
28authority may impose a penalty equal to an increase of up to 5%
29above the existing rate for the remainder of the loan, unless it
30determines that the failure is due to circumstances outside the

1control of the loan recipient.

2§ 1753. Export Financing Program.

3(a) General rule.--The Export Financing Program shall
4provide loans and lines of credit to export businesses for
5working capital and accounts receivable financing, in order to
6increase the level of foreign exports and the number of
7Pennsylvania companies exporting goods and services.

8(b) Application.--In addition to the requirements listed in
9section 1750(b) (relating to programs generally), the
10application shall include the following:

11(1) The number of employment opportunities to be created
12or preserved by the proposed capital development project.

13(2) A financial commitment from a responsible source for
14any cost of the capital development project in excess of the
15amount requested.

16(3) A statement that the loan, if approved, would not
17supplant funding from private sector sources on commercially
18reasonable terms.

19(4) A demonstration that the applicant will be able to
20meet and satisfy the debt service as it becomes due and
21payable.

22(5) The existence and sufficiency of collateral for the
23loan.

24(c) Conditions and restrictions.--

25(1) The maximum loan amount, repayment period and
26interest rate available under this program will be set by the
27authority.

28(2) The authority may, in its discretion, require any of
29the following:

30(i) That the applicant be eligible for an export

1credit insurance policy for small businesses offered by
2the Ex-Im Bank.

3(ii) That the export credit sales contract be
4insured by an export credit insurance policy offered by
5the Ex-Im Bank.

6(iii) That the loan be guaranteed by the working
7capital guaranty program offered by the Ex-Im Bank.

8(3) No loan shall be approved if the proceeds of the
9loan would be used to provide funds for speculation in real
10or personal property, whether tangible or intangible.

11(4) All loans shall be secured by lien positions on
12collateral at the highest level of priority, as may be
13determined by the authority.

14(d) Penalty for noncompliance.--In the event that a loan
15recipient fails to create or preserve the number of employment
16opportunities specified in the approved application, the
17authority may impose a penalty equal to an increase of up to 5%
18above the existing loan interest rate for the remainder of the
19loan, unless it determines that the failure is due to
20circumstances outside the control of the loan recipient.

21§ 1754. Pennsylvania Industrial Development Program.

22(a) General rule.--The Pennsylvania Industrial Development
23Program shall provide loans for industrial development projects,
24industrial parks and multiple-tenancy building projects, in
25order to increase employment levels and the overall economic
26health of this Commonwealth.

27(b) Loans for industrial development projects.--The
28authority may contract to loan an amount not to exceed 50% of
29the cost of establishing the industrial development project,
30subject, however, to the following conditions:

1(1) Prior to the making of any loan under this
2paragraph, the authority shall determine that:

3(i) The borrower is responsible to assume all
4obligations imposed by the authority in connection with
5the project, financial or otherwise, and to undertake the
6operation of the project.

7(ii) The borrower has obtained from other
8independent and responsible sources a firm commitment for
9any funds which, in addition to the loan made pursuant to
10this paragraph and any other property or assets held by
11the borrower, shall be necessary for the completion and
12operation of the project.

13(2) The authority shall determine the interest rate and
14repayment period of any loan made under this section.

15(3) A loan made under this section shall be evidenced by
16note of the borrower, and secured by a mortgage on the
17project for which such loan was made, subordinate only to the
18mortgage securing the first lien obligation issued to secure
19the commitment of funds provided to pay the cost of the
20project from the aforesaid independent and responsible
21sources, and used in the financing of the project.

22(4) The authority may require such additional security
23it may deem necessary.

24(c) Loans for industrial parks.--The authority may contract
25to loan an amount not to exceed 90% of the cost of establishing
26an industrial park project, subject to the following conditions:

27(1) (Reserved).

28(2) The authority shall determine the interest rate and
29repayment period of any loan made under this subsection.

30(3) A loan made under this section shall be evidenced by

1note of the borrower and secured by a first mortgage on the
2industrial park or by participation in a first mortgage. If,
3however, a Federal agency is participating in the financing
4of the industrial park, the authority may take as security
5for its loan a mortgage on the industrial park which is
6second only to the mortgage given to the Federal agency.

7(4) If a loan made under this section is secured by
8participation in a first mortgage on the industrial park, a
9portion of the loan, not to exceed 10% of the cost of the
10project, may be secured by a second mortgage on the
11industrial park which is second only to the participating
12first mortgage.

13(d) Loans for multiple-tenancy building projects.--The
14authority may contract to loan an amount not to exceed 75% of
15the cost of establishing the multiple-tenancy building project,
16subject, however, to the following conditions:

17(1) (Reserved).

18(2) The authority shall determine the interest rate and
19repayment period of any loan made under this section.

20(3) A loan made under this section shall be evidenced by
21note of the borrower and secured by a first mortgage or
22participation in a first mortgage on the multiple-tenancy
23building project.

24(4) The authority may contract to loan an amount not to
25exceed 75% of the cost of the project if the loan is secured
26by a first mortgage or participation in a first mortgage on
27the project; otherwise, the authority may contract to loan an
28amount not to exceed 40% of the cost of the project.

29(5) If a loan made under this section is secured by a
30participation in a first mortgage on the project, the

1authority may permit a portion of its loan, not to exceed 10%
2of the cost of the project, to be secured by a second
3mortgage on the project which is second only to the
4participating first mortgage.

5(e) Application.--In addition to the requirements listed in
6section 1750(b) (relating to programs generally), the
7application shall include the following:

8(1) A general description of the type, classes and
9number of employees employed or to be employed in the
10operation of the project.

11(2) The cost or estimate of the cost of establishing the
12project. As used in this section, "cost" shall include
13financing charges, including interest incurred prior to and
14during construction, but shall not include the cost of any
15machinery, equipment or fixtures necessary for the project or
16the installation or maintenance of any such machinery,
17equipment or fixtures.

18(3) Evidence of the arrangement made by the borrower for
19the financing of all costs of the project over and above the
20participation of the authority.

21(4) Evidence that the establishment of the project will
22not cause the removal of an industrial enterprise,
23manufacturing enterprise, research and development
24enterprise, agricultural producer or agricultural processor
25from one area of this Commonwealth to another area of this
26Commonwealth, as determined by the authority.

27(f) Employment projection audits.--The authority shall
28implement a procedure to determine whether the employment
29projections set out in the loan application are achieved.

30§ 1755. Machinery and Equipment Loan Program.

1(a) General rule.--The Machinery and Equipment Loan Program
2shall provide loans to businesses involved in industrial
3processes, manufacturing, mining, production agriculture,
4information technology or biotechnology for the purchase,
5installation or upgrade of equipment and machinery, including
6computer hardware and software.

7(b) Application.--In addition to the requirements listed in
8section 1750(b) (relating to programs generally), the
9application shall include the following:

10(1) A demonstration that the applicant is able to meet
11and satisfy all debt service as it becomes due and payable.

12(2) Evidence of available and sufficient collateral,
13including satisfactory lien positions on real and personal
14property.

15(3) Sufficient evidence that funds shall be used only to
16acquire and install new equipment and machinery or upgrade
17existing equipment and machinery, including the acquisition,
18application and utilization of computer hardware and
19software.

20(4) The number of net employment opportunities to be
21created by the proposed project unless the business is
22involved in production agriculture.

23(5) Evidence that the loan project will increase the
24business's competitiveness within its respective industry.

25(c) Loan terms and limitations.--The following shall apply:

26(1) No loan shall exceed 50% of the cost of the project.

27(2) Loan terms shall not exceed ten years in duration.

28(3) Proceeds of loans made under this section may not be
29used for speculation in any kind of property, real or
30personal, tangible or intangible.

1(4) Loans shall be made only for projects that
2demonstrate a significant likelihood of resulting in job
3creation or retention, as established by the authority. This
4paragraph does not apply to loans made to business
5enterprises involved in production agriculture.

6(d) Security.--All loans shall be secured by no less than a
7second lien position on the equipment purchased and other
8sufficient collateral as determined by the authority.

9(e) Penalty for noncompliance.--In the event that a loan
10recipient fails to create or preserve the number of employment
11opportunities specified in the approved application, the
12authority may impose a penalty equal to an increase of up to 5%
13above the existing rate for the remainder of the loan, unless it
14determines that the failure is due to circumstances outside the
15control of the loan recipient.

16§ 1756. Disadvantaged Business Development Program.

17(a) General rule.--The Disadvantaged Business Development
18Program shall provide financial assistance to businesses owned
19by socially and economically disadvantaged persons.

20(b) Application.--In addition to the requirements listed in
21section 1750(b) (relating to programs generally), the
22application shall include the following:

23(1) A statement that the applicant is a United States
24citizen, resident of this Commonwealth and member of a group
25or groups which have suffered disadvantages arising from
26chronic racial, ethnic or economic circumstances.

27(2) An explanation as to how the applicant's ability to
28compete in the free enterprise system has been impaired due
29to diminished capital and credit opportunities, as compared
30to others in the same or a similar line of business who are

1not socially and economically disadvantaged.

2(c) Loan terms and conditions.--The authority shall have the
3power to lend money to and to guarantee, endorse or act as
4surety on the bonds, notes, contracts or other obligations of,
5or otherwise financially assist a business owned by a person who
6meets the criteria in subsection (a), and to establish and
7regulate the terms, security and conditions with respect to any
8such loans or financial assistance and the charges for interest
9and service connected therewith.

10§ 1757. First Industries Program.

11(a) General purpose.--The First Industries Program shall
12provide financial assistance for projects related to tourism and
13agriculture located within this Commonwealth.

14(b) Loans.--The First Industries Program shall provide loans
15to businesses involved in tourism and agriculture that would
16otherwise satisfy the requirements for a loan under section 1751
17(relating to Small Business First Program), 1752 (relating to
18Community Economic Development Program) or 1755 (relating to
19Machinery and Equipment Loan Fund Program).

20(c) Loan guarantees.--An applicant may request a guarantee
21for a loan to be made by a commercial lending institution or
22community development financial institution to assist with the
23financing of a project related to tourism or agriculture.

24(d) Application.--In addition to the requirements listed in
25section 1750(b) (relating to programs generally), the
26application shall include the following:

27(1) A description of the proposed project financing,
28including terms, conditions and the collateral or security
29required for the loan for which the guarantee is being
30requested.

1(2) A copy of the borrower's last two years of financial
2statements.

3(e) Terms and limitations.--

4(1) The maximum guarantee amount and percentage made
5under this section shall be determined by the authority.

6(2) No less than $500,000 of private funds must be
7invested in the project.

8(3) In addition to any other terms and conditions
9required by the authority, the guarantee agreement shall
10provide for the following:

11(i) The procedure for the submission by the
12commercial lending institution or community development
13financial institution of a claim for payment. This
14procedure shall require that the commercial lending
15institution or community development financial
16institution demonstrate that it has exhausted all
17available remedies against the borrower, other guarantors
18and collateral before seeking payment under the
19agreement.

20(ii) A requirement that a percentage of any moneys
21recovered subsequent to the payment of a claim by the
22authority be remitted to the authority.

23(iii) Periodic reporting requirements by the
24commercial lending institution or community development
25financial institution regarding itself and the loans that
26have been awarded guarantees under this section.

27§ 1758. Second Stage Loan Guarantee Program.

28(a) General purpose.--The Second Stage Loan Guarantee
29Program shall provide loan guarantees to commercial lending
30institutions that make loans to life sciences, advanced

1technology or manufacturing businesses located in this
2Commonwealth.

3(b) Application for enrollment.--A commercial lending
4institution may apply for enrollment in the program authorized
5by this section. The application shall be in the form required
6by the authority and, in addition to the requirements listed in
7section 1750(b) (relating to programs generally), shall include
8the following:

9(1) The name and address of the commercial lending
10institution and the name and title of the individual who will
11serve as the point of contact for the commercial lending
12institution.

13(2) A statement defining the service area of the
14commercial lending institution.

15(3) A statement describing the commercial lending
16activities engaged in by the commercial lending institution
17and how the institution intends to expand those activities as
18a result of its participation in the program authorized by
19this section.

20(c) Enrollment approval.--Upon approval of an application
21for enrollment, the authority shall execute a master guarantee
22agreement in favor of the commercial lending institution. In
23addition to any other terms and conditions required by the
24authority, the master guarantee agreement shall provide for the
25following:

26(1) The procedure for the submission of a claim for
27payment by the commercial lending institution. The procedure
28shall require that the commercial lending institution
29demonstrate that it has exhausted all available remedies
30against the borrower, other guarantors and collateral for the

1loan before seeking payment under the agreement.

2(2) A requirement that a percentage of any moneys
3recovered by the commercial lending institution subsequent to
4any payment made under the master guarantee agreement by the
5authority be remitted to the authority.

6(3) Periodic reporting requirements by the commercial
7lending institution regarding itself and regarding the loans
8for which guarantee certificates have been issued under this
9section.

10(d) Application for guarantee.--A commercial lending
11institution enrolled in the program authorized by this section
12may submit an application to the authority for the guarantee of
13a proposed loan. The application shall be in the form required
14by the authority and, in addition to the requirements listed in
15section 1750(b), shall include the following:

16(1) A demonstration that the use of loan proceeds by the
17borrower will result in jobs being created or retained within
18this Commonwealth, and an estimate as to the number of
19projected new or retained employees as a result of the loan.

20(2) A statement that the borrower's business is located
21within the commercial lending institution's service area and
22within this Commonwealth.

23(3) A copy of the borrower's last two years of financial
24statements prepared or reported on by an independent
25certified public accountant.

26(4) A statement describing the purpose of the loan, the
27requested amount of the loan, a copy of the commercial
28lending institution's commitment letter and applicable credit
29underwriting that supports the repayment of the loan, as well
30as the collateral and other guarantees offered by the

1borrower to support the loan.

2(5) Certification that the borrower's business has been
3in existence for at least two years at the time of
4application.

5(6) Demonstration that the borrower is financially
6responsible and has the ability to repay the loan.

7(e) Limitations.--

8(1) The maximum guarantee amount and percentage shall be
9determined by the authority and shall terminate at the end of
10seven years.

11(2) At no time may a guarantee exceed $1,000,000 for any
12one loan.

13SUBCHAPTER F

14MISCELLANEOUS PROVISIONS

15Sec.

161771. Definitions.

171771.1 Transfer from Pennsylvania Industrial Development
18Authority to Pennsylvania Business Development
19Authority.

201772. Transfer from Commonwealth Financing Authority to
21Pennsylvania Business Development Authority for First
22Industries Program and Second Stage Program.

231773. Transfer from Pennsylvania Minority Business Development
24Authority to Pennsylvania Business Development
25Authority.

261774. Successorship and transfer of assets and liabilities.

27§ 1771. Definitions.

28The following words and phrases when used in this subchapter
29shall have the meanings given to them in this section unless the
30context clearly indicates otherwise:

1"Account." The Pennsylvania Industrial Development Account
2and any similar account established by a successor to the
3Pennsylvania Business Development Authority that assumes the
4obligations under the Pennsylvania Industrial Development
5Authority bond indenture.

6"Debt." Notes, instruments and other evidences of
7indebtedness or obligations which were issued prior to the
8effective date of this section for the same programs or similar
9programs to those described under Subchapter E (relating to
10programs) and under the following:

11(1) The act of May 17, 1956 (1955 P.L.1609, No.537),
12known as the Pennsylvania Industrial Development Authority
13Act.

14(2) The act of July 22, 1974 (P.L.598, No.206), known as
15the Pennsylvania Minority Business Development Authority Act.

16(3) 12 Pa.C.S. Chs. 23 (relating to small business
17first) and 29 (relating to machinery and equipment loans).

18"Debt instrument." Any trust instrument or indenture or
19other financial instrument pursuant to which debt was issued,
20incurred or secured.

21"Program." The Pennsylvania Industrial Development Program. 
22The term shall include any similar program established by a
23successor to the Pennsylvania Business Development Authority
24that assumes the obligations under the Pennsylvania Industrial
25Development Authority bond indenture.

26"Prior programs." Except for programs transferred under
27sections 1771.1 (relating to transfer from Pennsylvania
28Industrial Development Authority to Pennsylvania Business
29Development Authority) and 1773 (relating to transfer from
30Pennsylvania Minority Business Development Authority to

1Pennsylvania Business Development Authority), the same programs
2or similar programs to those described under Subchapter E
3(relating to programs) and created under the following acts
4which are repealed, in whole or in part, pursuant to this 
5chapter:

6(1) The act of May 17, 1956 (1955 P.L.1609, No.537),
7known as the Pennsylvania Industrial Development Authority
8Act.

9(2) The act of July 22, 1974 (P.L.598, No.206), known as
10the Pennsylvania Minority Business Development Authority Act.

11(3) 12 Pa.C.S. Chs. 23 (relating to small business
12first) and 29 (relating to machinery and equipment loans).

13(4) Sections 1552 (relating to First Industries Program)
14and 1553 (relating to Second Stage Loan Program).

15§ 1771.1. Transfer from Pennsylvania Industrial Development
16Authority to Pennsylvania Business Development
17Authority.

18(a) (Reserved).

19(b) Designation of Pennsylvania Business Development
20Authority as successor to Pennsylvania Industrial Development
21Authority.--The Pennsylvania Business Development Authority, as
22a public instrumentality of the Commonwealth, shall be and is
23designated as successor to Pennsylvania Industrial Development
24Authority. The separate existence of the Pennsylvania Industrial
25Development Authority shall cease.

26(c) Transfer of assets and liabilities of Pennsylvania
27Industrial Development Authority.--The following shall occur:

28(1) The following shall be taken and deemed to be
29transferred to and vested in the Pennsylvania Business
30Development Authority, subject to any pledge in favor of the

1holders of bonds:

2(i) All of the real, personal and mixed property and
3all interests in the property of the Pennsylvania
4Industrial Development Authority, including loans to
5industrial development agencies and property acquired as
6a result of foreclosures or in lieu of foreclosures of
7mortgages securing the loans.

8(ii) Any debts or amount due to the Pennsylvania
9Industrial Development Authority.

10(iii) The Pennsylvania Industrial Development
11Authority's right, title and interest in and to revenues
12pledged to secure bonds, the interests of the
13Pennsylvania Industrial Development Authority under trust
14instruments securing its bonds, including the right to
15issue obligations pursuant to and secured by the
16instruments, sinking funds on deposit and all funds
17deposited under trust instruments, leaseholds and rights
18and deposits under the trust instruments.

19(iv) Rights under interest rate exchange agreements
20and other financial instruments.

21(v) Appropriations.

22(vi) All other rights and assets of the Pennsylvania
23Industrial Development Authority of any nature.

24(2) (i) The Pennsylvania Business Development Authority
25shall succeed to, assume and become liable for all
26liabilities and obligations of the Pennsylvania
27Industrial Development Authority, including the bonds and
28the Pennsylvania Industrial Development Authority bond
29indenture, obligations under interest rate exchange
30agreements and other financial instruments, contracts for

1purchase of goods or services and other liabilities of
2any nature.

3(ii) The liabilities and obligations under subparagraph
4(i) shall be subject to the same limitations as were
5applicable to the Pennsylvania Industrial Development
6Authority prior to the transfer of assets and liabilities,
7including limitations as to payment source, pledges,
8assignments, liens, charges, terms and conditions.

9(iii) The transfer of assets and liabilities to the
10Pennsylvania Business Development Authority as successor are
11assumed by the Pennsylvania Business Development Authority
12and shall not impair the rights or the security of holders of
13bonds or other creditors, persons dealing with Pennsylvania
14Industrial Development Authority, liens upon the property of
15Pennsylvania Industrial Development Authority or persons
16holding claims against Pennsylvania Industrial Development
17Authority.

18(iv) Any claim existing or action or proceeding pending
19by or against the Pennsylvania Industrial Development
20Authority shall be prosecuted to judgment as if the transfer
21had not taken place or the Pennsylvania Business Development
22Authority may be proceeded against or substituted in its
23place.

24(d) Rights and powers.--

25(1) Nothing under this chapter shall alter or limit the
26rights and powers vested in the Pennsylvania Business
27Development Authority as successor to the Pennsylvania
28Industrial Development Authority or otherwise created under
29the act of May 17, 1956 (1955 P.L.1609, No.537), known as the
30Pennsylvania Industrial Development Authority Act, in any

1manner inconsistent with the obligations of the Pennsylvania
2Industrial Development Authority and, after the effective
3date of this section, the Pennsylvania Business Development
4Authority, to obligees of the Pennsylvania Industrial
5Development Authority until all bonds issued by the
6Pennsylvania Industrial Development Authority, together with
7the interest on the bonds, are fully paid and discharged.

8(2) Nothing under this chapter shall authorize personal
9recourse for any claim based on bonds or trust instruments
10securing the bonds or trust instruments, against any member,
11officer or employee of the Pennsylvania Industrial
12Development Authority, either directly or through the
13Pennsylvania Industrial Development Authority or the
14Pennsylvania Business Development Authority under any
15constitutional provision, statute or rule of law or by the
16enforcement of any assessment or penalty or otherwise.

17(e) Pennsylvania Industrial Development Account and
18Program.--

19(1) The provisions of this chapter relating to the
20account and the program shall apply to the assets and
21revenues of the Pennsylvania Industrial Development Authority
22transferring to the Pennsylvania Business Development
23Authority as successor in addition to the assets and revenues
24arising from the continuing program subsequent to the
25transfer.

26(2) The pledge made by the trust instruments securing
27the Pennsylvania Industrial Development Authority bonds shall
28apply to revenues of the Pennsylvania Business Development
29Authority from the program and to assets held in the account.
30No withdrawals from the account may be made except in

1compliance with the trust instruments securing the
2Pennsylvania Industrial Development Authority bonds.

3(f) Definition.--As used in this section, the term "bond"
4means any bond, note or other financial obligation of the
5Pennsylvania Industrial Development Authority, including
6interest rate exchange agreements or other financial instruments
7related to bonds.

8§ 1772. Transfer from Commonwealth Financing Authority to the
9Pennsylvania Business Development Authority for the
10First Industries Program and Second Stage Loan
11Program.

12On the effective date of this chapter, the trust accounts
13established by the Commonwealth Financing Authority under
14sections 1541 (relating to trust accounts) and 1542(b) (relating
15to revolving loan program accounts) for the First Industries
16Program and the Second Stage Loan Program shall be transferred
17to and vested in the authority without further act or deed.

18§ 1773. Transfer from Pennsylvania Minority Business
19Development Authority to Pennsylvania Business
20Development Authority.

21(a) (Reserved).

22(b) Designation of Pennsylvania Business Development
23Authority as successor to the Pennsylvania Minority Business
24Development Authority.--The Pennsylvania Business Development
25Authority, as a public instrumentality of the Commonwealth,
26shall be and is designated as successor to the Pennsylvania
27Minority Business Development Authority. The separate existence
28of the Pennsylvania Minority Business Development Authority
29shall cease.

30(c) Transfer of assets and liabilities of the Pennsylvania

1Minority Business Development Authority.--The following shall
2occur:

3(1) The following shall be taken and deemed to be
4transferred to and vested in the Pennsylvania Business
5Development Authority, subject to any pledge in favor of the
6holders of bonds:

7(i) All of the real, personal and mixed property and
8all interests in the property of the Pennsylvania
9Minority Business Development Authority, including loans
10and other debts owing to the Pennsylvania Minority
11Business Development Authority and amounts due to the
12Pennsylvania Minority Business Development Authority
13under the loans and debts.

14(ii) The right, title and interest of the
15Pennsylvania Minority Business Development Authority
16under bond indentures, including all revenues pledged as
17security for the right, title and interest and the right
18to issue obligations pursuant to and secured by the bond
19indentures, sinking funds on deposit and all funds
20deposited under bond indentures, leaseholds and rights
21and deposits under bond indentures.

22(iii) Appropriations.

23(iv) All other rights and assets of the Pennsylvania
24Minority Business Development Authority.

25(2) (i) The Pennsylvania Business Development Authority
26shall succeed to, assume and become liable for all
27liabilities and obligations of the Pennsylvania Minority
28Business Development Authority, including the bonds, bond
29indentures, contracts for purchase of goods or services
30and other liabilities.

1(ii) The liabilities and obligations under
2subparagraph (i) shall be subject to the same limitations
3as were applicable to the Pennsylvania Minority Business
4Development Authority prior to the transfer of assets and
5liabilities, including limitations as to payment source,
6pledges, assignments, liens, charges, terms and
7conditions.

8(iii) The transfer of assets and liabilities to the
9Pennsylvania Business Development Authority as successor
10are assumed by the Pennsylvania Business Development
11Authority and shall not impair the rights or the security
12of holders of bonds or other creditors of the
13Pennsylvania Minority Business Development Authority,
14persons dealing with the Pennsylvania Minority Business
15Development Authority, liens upon the property of the
16Pennsylvania Minority Business Development Authority or
17persons holding claims against the Pennsylvania Minority
18Business Development Authority.

19(iv) Any claim existing or action or proceeding
20pending by or against the Pennsylvania Minority Business
21Development Authority shall be prosecuted to judgment as
22if the transfer had not taken place or the Pennsylvania
23Business Development Authority may be proceeded against
24or substituted in its place.

25(d) Rights and powers.--

26(1) Nothing under this chapter shall alter or limit the
27rights and powers vested in the Pennsylvania Business
28Development Authority as successor to the Pennsylvania
29Minority Business Development Authority or otherwise created
30by the act of July 22, 1974 (P.L.598, No.206), known as the
 

1Pennsylvania Minority Business Development Authority Act,
2and, after the effective date of this section, the
3Pennsylvania Business Development Authority, to obligees of
4the Pennsylvania Minority Business Development Authority
5until all bonds issued by the Pennsylvania Minority Business
6Development Authority, together with the interest on the
7bonds, are fully paid and discharged.

8(2) Nothing under this chapter shall authorize personal
9recourse for any claim based on any obligation of the
10Pennsylvania Minority Business Development Authority,
11including its bonds or bond indentures, against any member,
12officer or employee of the Pennsylvania Minority Business
13Development Authority either directly or through the
14Pennsylvania Minority Business Development Authority or the
15Pennsylvania Business Development Authority under any
16constitutional provision, statute or rule of law or by the
17enforcement of any assessment or penalty or otherwise.

18(e) Definition.--As used in this section, the term "bond" 
19means bonds, notes and other evidences of indebtedness or 
20obligations which the Pennsylvania Minority Business Development 
21Authority issued under the act of July 22, 1974 (P.L.598, 
22No.206), known as the Pennsylvania Minority Business Development 
23Authority Act.

24§ 1774. Successorship and transfer of assets and liabilities.

25(a) (Reserved).

26(b) Transfer of assets and liabilities of prior programs.--
27The following shall occur:

28(1) The following shall be taken and deemed to be
29transferred to and vested in the Pennsylvania Business
30Development Authority, subject to any pledge in favor of the

1holders of debt:

2(i) All of the real, personal and mixed property and
3all interests in the property of the prior programs,
4including loans and other debts owing to the prior
5programs and amounts due to the prior programs under the
6loans and other debts.

7(ii) The right, title and interest of the prior
8programs under debt instruments, including all revenues
9pledged as security for the right, title and interest and
10the right to issue obligations pursuant to and secured by
11the debt instruments, sinking funds on deposit and all
12funds deposited under debt instruments, leaseholds and
13rights and deposits under the debt instruments.

14(iii) Appropriations made with respect to the prior
15programs.

16(iv) All other rights and assets of the prior
17programs.

18(2) (i) The Pennsylvania Business Development Authority
19shall succeed to, assume and become liable for all
20liabilities and obligations of the prior programs,
21including the debt, debt instruments, contracts for
22purchase of goods or services, and other liabilities.

23(ii) The liabilities and obligations under
24subparagraph (i) shall be subject to the same limitations
25as were applicable to the prior programs prior to the
26transfer of assets and liabilities, including limitations
27as to payment source, pledges, assignments, liens,
28charges, terms and conditions.

29(iii) The transfer of assets and liabilities to the
30Pennsylvania Business Development Authority as successor

1shall not impair the rights or the security of holders of
2debt or other creditors of the prior programs, persons
3dealing with the prior programs, liens upon the property
4of the prior programs or persons holding claims against
5the prior programs, all of which are assumed by the
6Pennsylvania Business Development Authority.

7(iv) Any claim existing or action or proceeding
8pending by or against the prior programs shall be
9prosecuted to judgment as if the transfer had not taken
10place or the Pennsylvania Business Development Authority
11may be proceeded against or substituted in its place.

12(c) Rights and powers.--

13(1) Nothing under this chapter shall alter or limit the
14rights and powers vested in the Pennsylvania Business
15Development Authority as successor to the prior programs or
16otherwise created by the acts under which the prior programs
17were initiated in any manner inconsistent with the
18obligations of the prior programs and, after the effective
19date of this section, the Pennsylvania Business Development
20Authority, to obligees of the prior programs until all debt
21at any time issued by the prior programs, together with the
22interest on the debt, are fully paid and discharged.

23(2) Nothing under this chapter shall authorize personal
24recourse for any claim based on any obligation of the prior
25programs, including without limitation its debt or debt
26instruments, against any member, officer or employee of the
27prior programs whether directly or through the prior programs
28or the Pennsylvania Business Development Authority under any
29constitutional provision, statute or rule of law or by the
30enforcement of any assessment or penalty or otherwise.

1Section 5. Any money that has been allocated or appropriated
2and has been expended prior to the effective date of this
3section for the same programs or similar programs to those
4described under 64 Pa.C.S. Ch. 17 Subch. E shall be deducted
5from the corresponding allocation or appropriation under 64
6Pa.C.S. Ch. 17.

7Section 6. Repeals are as follows:

8(1) The General Assembly declares that the repeal under
9paragraph (2) is necessary to effectuate the addition of the
10following provisions of 64 Pa.C.S.:

11(i) Ch. 17 Subch. C.

12(ii) Section 1731(4).

13(iii) Section 1734(a).

14(iv) Section 1754.

15(v) Section 1771.1.

16(2) The act of May 17, 1956 (1955 P.L.1609, No.537),
17known as the Pennsylvania Industrial Development Authority
18Act, is repealed.

19(3) The General Assembly declares that the repeal under
20paragraph (4) is necessary to effectuate the addition of the
21following provisions of 64 Pa.C.S.:

22(i) Ch. 17 Subch C.

23(ii) Section 1731(6).

24(iii) Section 1756.

25(iv) Section 1773.

26(4) The act of July 22, 1974 (P.L.598, No.206), known as
27the Pennsylvania Minority Business Development Authority Act,
28is repealed.

29Section 7. This act continues repealed provisions of the
30Pennsylvania Consolidated Statutes as follows:

1(1) The addition of 64 Pa.C.S. §§ 1731(1) and 1751 is a
2continuation of 12 Pa.C.S. Ch. 23. Except as otherwise
3provided in 64 Pa.C.S. § 1731(1) or 1751, all activities
4initiated under 12 Pa.C.S. Ch. 23 shall continue and remain
5in full force and effect and may be completed under 64
6Pa.C.S. §§ 1731(1) and 1751. Orders, regulations, rules and
7decisions which were made under the 12 Pa.C.S. Ch. 23 and
8which are in effect on the effective date of section 1 {12
9Pa.C.S. Ch. 23} of this act shall remain in full force and
10effect until revoked, vacated or modified under 64 Pa.C.S. §
111731(1) or 1751. Contracts, obligations and collective
12bargaining agreements entered into under 12 Pa.C.S. Ch. 23
13are not affected nor impaired by the repeal of 12 Pa.C.S. Ch.
1423.

15(2) The addition of 64 Pa.C.S. §§ 1731(5) and 1755 is a
16continuation of 12 Pa.C.S. Ch. 29. Except as otherwise
17provided in 64 Pa.C.S. § 1731(5) or 1755, all activities
18initiated under 12 Pa.C.S. Ch. 29 shall continue and remain
19in full force and effect and may be completed under 64
20Pa.C.S. §§ 1731(5) and 1755. Orders, regulations, rules and
21decisions which were made under the 12 Pa.C.S. Ch. 29 and
22which are in effect on the effective date of section 1 {12
23Pa.C.S. Ch. 29} of this act shall remain in full force and
24effect until revoked, vacated or modified under 64 Pa.C.S. §
251731(5) or 1755. Contracts, obligations and collective
26bargaining agreements entered into under 12 Pa.C.S. Ch. 29
27are not affected nor impaired by the repeal of 12 Pa.C.S. Ch.
2829.

29(3) The addition of 64 Pa.C.S. §§ 1731(7), 1757 and 1772
30is a continuation of 64 Pa.C.S. §§ 1542(b) and 1552. Except

1as otherwise provided in 64 Pa.C.S. § 1731(7), 1757 or 1772,
2all activities initiated under 64 Pa.C.S. §§ 1542(b) and 1552
3shall continue and remain in full force and effect and may be
4completed under 64 Pa.C.S. §§ 1731(7), 1757 and 1772. Orders,
5regulations, rules and decisions which were made under 64
6Pa.C.S. §§ 1542(b) and 1552 and which are in effect on the
7effective date of sections 2 and 3 {64 Pa.C.S. §§ 1542(b) and
81552} of this act shall remain in full force and effect until
9revoked, vacated or modified under 64 Pa.C.S. § 1731(7), 1757
10or 1772. Contracts, obligations and collective bargaining
11agreements entered into under 64 Pa.C.S. §§ 1542(b) and 1552
12are not affected nor impaired by the repeal of 64 Pa.C.S. §§
131542(b) and 1552.

14(4) The addition of 64 Pa.C.S. §§ 1731(8), 1758 and 1772
15is a continuation of 64 Pa.C.S. § 1553. Except as otherwise
16provided in 64 Pa.C.S. § 1731(8), 1758 or 1772, all
17activities initiated under 64 Pa.C.S. § 1553 shall continue
18and remain in full force and effect and may be completed
19under 64 Pa.C.S. §§ 1731(8), 1758 and 1772. Orders,
20regulations, rules and decisions which were made under 64
21Pa.C.S. § 1553 and which are in effect on the effective date
22of section 3 {64 Pa.C.S. § 1553} of this act shall remain in
23full force and effect until revoked, vacated or modified
24under 64 Pa.C.S. § 1731(7), 1757 or 1772. Contracts,
25obligations and collective bargaining agreements entered into
26under 64 Pa.C.S. § 1553 are not affected nor impaired by the
27repeal of 64 Pa.C.S. § 1553.

28Section 8. The addition of 64 Pa.C.S. Ch. 17 Subch. C is a
29continuation of the act of May 17, 1956 (1955 P.L.1609, No.537),
30known as the Pennsylvania Industrial Development Authority Act

1and the act of July 22, 1974 (P.L.598, No.206), known as the
2Pennsylvania Minority Business Development Authority Act. The
3following apply:

4(1) Except as otherwise provided in 64 Pa.C.S. Ch. 17
5Subch. C, all activities related to bonds initiated under the
6Pennsylvania Industrial Development Authority Act or the
7Pennsylvania Minority Business Development Authority Act
8shall continue and remain in full force and effect and may be
9completed under 64 Pa.C.S. Ch. 17 Subch. C. Orders,
10regulations, rules and decisions which were related to bonds,
11which were made under the Pennsylvania Industrial Development
12Authority Act or the Pennsylvania Minority Business
13Development Authority Act and which are in effect on the
14effective date of section 7 of this act shall remain in full
15force and effect until revoked, vacated or modified under 64
16Pa.C.S. Ch. 17 Subch. C. Contracts, obligations and
17collective bargaining agreements which are related to bonds
18and which were entered into under the the Pennsylvania
19Industrial Development Authority Act or the Pennsylvania
20Minority Business Development Authority Act are not affected
21nor impaired by the repeal of the the Pennsylvania Industrial
22Development Authority Act or the Pennsylvania Minority
23Business Development Authority Act.

24(2) Any difference in language between 64 Pa.C.S. Ch. 17
25Subch C and the Pennsylvania Industrial Development Authority
26Act or the Pennsylvania Minority Business Development
27Authority Act is intended only to conform to the style of the
28Pennsylvania Consolidated Statutes and is not intended to
29change or affect the legislative intent, judicial
30construction or administration and implementation of the

1Pennsylvania Industrial Development Authority Act or the
2Pennsylvania Minority Business Development Authority Act.

3Section 9. The addition of 64 Pa.C.S. §§ 1731(4), 1734(a),
41754 and 1771.1 is a continuation of the act of May 17, 1956
5(1955 P.L.1609, No.537), known as the Pennsylvania Industrial
6Development Authority Act. The following apply:

7(1) Except as otherwise provided in 64 Pa.C.S. §
81731(4), 1734(a), 1754 or 1771.1, all activities initiated
9under the Pennsylvania Industrial Development Authority Act
10shall continue and remain in full force and effect and may be
11completed under 64 Pa.C.S. § 1731(4), 1734(a), 1754 or
121771.1. Orders, regulations, rules and decisions which were
13made under the Pennsylvania Industrial Development Authority
14Act and which are in effect on the effective date of section
157(2) of this act shall remain in full force and effect until
16revoked, vacated or modified under 64 Pa.C.S. § 1731(4),
171734(a), 1754 or 1771.1. Contracts, obligations and
18collective bargaining agreements entered into under the
19Pennsylvania Industrial Development Authority Act are not
20affected nor impaired by the repeal of the Pennsylvania
21Industrial Development Authority Act.

22(2) Any difference in language between 64 Pa.C.S. §
231731(4), 1734(a), 1754 or 1771.1 and the Pennsylvania
24Industrial Development Authority Act is intended only to
25conform to the style of the Pennsylvania Consolidated
26Statutes and is not intended to change or affect the
27legislative intent, judicial construction or administration
28and implementation of the Pennsylvania Industrial Development
29Authority Act.

30Section 10. The addition of 64 Pa.C.S. §§ 1731(6), 1756 and

11773 is a continuation of the act of July 22, 1974 (P.L.598,
2No.206), known as the Pennsylvania Minority Business Development
3Authority Act. The following apply:

4(1) Except as otherwise provided in 64 Pa.C.S. §
51731(6), 1756 or 1773, all activities initiated under the
6Pennsylvania Minority Business Development Authority Act
7shall continue and remain in full force and effect and may be
8completed under 64 Pa.C.S. §§ 1731(6), 1756 and 1773. Orders,
9regulations, rules and decisions which were made under the
10the Pennsylvania Minority Business Development Authority Act
11and which are in effect on the effective date of section
127(4) of this act shall remain in full force and effect until
13revoked, vacated or modified under 64 Pa.C.S. §§ 1731(6),
141756 and 1773. Contracts, obligations and collective
15bargaining agreements entered into under the Pennsylvania
16Minority Business Development Authority Act are not affected
17nor impaired by the repeal of the Pennsylvania Minority
18Business Development Authority Act.

19(2) Any difference in language between 64 Pa.C.S. §§
201731(6), 1756 and 1773 and the Pennsylvania Minority Business
21Development Authority Act is intended only to conform to the
22style of the Pennsylvania Consolidated Statutes and is not
23intended to change or affect the legislative intent, judicial
24construction or administration and implementation of the
25Pennsylvania Minority Business Development Authority Act.

26Section 11. This act shall take effect in 60 days.

<-27Section 1. Section 302 of Title 12 of the Pennsylvania
28Consolidated Statutes is amended to read:

29§ 302. Definitions.

30The following words and phrases when used in this chapter

1shall have the meanings given to them in this section unless the
2context clearly indicates otherwise:

3"Economic development program." A program which is
4administered by the department, including programs administered
5or staffed by the department, and which provides financial
6assistance for economic development to persons. The term
7includes all of the following:

8(1) Any program created under Part III (relating to
9economic development programs).

10(2) Any program of an entity created under [Part IV] 64 
11Pa.C.S. Pt. II (relating to economic development financing).

12(3) The Pennsylvania Industrial Development Authority.

13(4) The Pennsylvania Minority Business Development
14Authority.

15(5) The Infrastructure Development Program.

16(6) The Industrial Sites Reuse Program.

17(7) The tax credit programs established in Articles
18XVII-B and XVIII-B of the act of March 4, 1971 (P.L.6, No.2),
19known as the Tax Reform Code of 1971.

20Section 1.1. The definitions of "area loan organization," 
21"community development institution," "distressed community," 
22"EDA loan," "hospitality industry project" and "pollution 
23prevention assistance agency" in section 2302 of Title 12 are
24amended and the section is amended by adding definitions to
25read:

26§ 2302. Definitions.

27The following words and phrases when used in this chapter
28shall have the meanings given to them in this section unless the
29context clearly indicates otherwise:

30* * *

1["Area loan organization." A local development district, an
2industrial development agency organized and existing under the
3act of May 17, 1956 (1955 P.L.1609, No.537), known as the
4Pennsylvania Industrial Development Authority Act, or any other
5nonprofit economic development organization certified by the
6department as possessing the qualifications necessary to
7evaluate and administer loans made under this chapter.]

8"Authority." The Pennsylvania Industrial Development
9Authority organized and existing under the act of May 17, 1956
10(1955 P.L.1609, No.537), known as the Pennsylvania Industrial
11Development Authority Act.

12"Board."  The board of directors of the authority.

13* * *

14"Certified economic development organization." An entity
15certified by the authority under 64 Pa.C.S. § 1123 (relating to
16certification of economic development organizations).

17* * *

18["Community development institution." Any of the following:

19(1) An area loan organization for a distressed
20community.

21(2) A community development financial institution
22located in a distressed community and approved by the
23department.]

24"Distressed community." A community which has any of the
25following:

26(1) A census tract or other specifically defined
27geographic area in which there is any of the following:

28(i) A median income below 80% of the median income
29for the United States or this Commonwealth.

30(ii) Twenty percent or more of the population is

1below the poverty level by family size published by the
2Bureau of the Census.

3(iii) An unemployment rate 50% higher than the
4national average.

5(2) An area which is designated a subzone, expansion
6subzone or improvement subzone under the act of October 6, 
71998 (P.L.705, No.92), known as the Keystone Opportunity Zone
8and Keystone Opportunity Expansion Zone Act.

9(3) Any other geographic area designated by the
10[department] authority as distressed. The designation shall
11be published in the Pennsylvania Bulletin.

12"EDA loan." A loan made under this chapter utilizing funds
13made available to the department or the authority under the
14Public Works and Economic Development Act of 1965 (Public Law
1589-136, 42 U.S.C. § 3121 et seq.).

16* * *

17"Hospitality industry project." A for-profit project or
18venture which involves a small business that operates a hotel,
19motel or other lodging facility and that employs at least five
20full-time equivalent employees at the time an application is
21submitted to the [department] authority for financing. The term
22includes a for-profit project or venture which involves a small
23business that operates a restaurant or food service operation
24open to the public, that has been in continuous operation for at
25least five years and that employs at least five full-time
26equivalent employees at the time an application is submitted.

27* * *

28["Pollution prevention assistance agency." Any of the
29following:

30(1) An area loan organization.

1(2) An industrial resource center created pursuant to
2the act of June 22, 2001 (P.L.400, No.31), known as the
3Industrial Resources Center Partnership Act.]

4* * *

5Section 2. Sections 2303 and 2304(a)(1) and (6), (b)(1) and
6(5), (c) and (d) of Title 12 are amended to read:

7§ 2303. Establishment.

8There is established [within the department] a program to be
9known as the Small Business First Program. The program shall be
10administered by the [department] authority and provide loans to
11eligible persons for certain projects which encourage job-
12creating and job-preserving economic development within this
13Commonwealth.

14§ 2304. Fund and accounts.

15(a) Fund.--The Small Business First Fund, created under
16section 1302(a) of the act of June 29, 1996 (P.L.434, No.67),
17known as the Job Enhancement Act, is continued. The Treasury
18Department shall credit the following to the fund:

19(1) Appropriations made by the General Assembly to the
20department or authority for the program.

21* * *

22(6) Any other deposits, payments or contributions from
23any other source made available to the department or 
24authority for the program.

25(b) Pollution prevention assistance.--The Pollution
26Prevention Assistance Account, created under the act of June 29, 
271996 (P.L.434, No.67), known as the Job Enhancement Act, is
28continued. The Treasury Department shall credit the following to
29this account:

30(1) Appropriations made by the General Assembly to the

1department or authority for pollution prevention assistance.

2* * *

3(5) Any other deposits, payments or contributions from
4any other source made available to the department or 
5authority for pollution prevention assistance.

6(c) Use of fund.--

7(1) Money in the fund may be used as follows:

8(i) By the [department] authority to make loans in
9accordance with this chapter and for administrative costs
10of the [department] authority in administering the
11program.

12(ii) By [area loan] certified economic development
13organizations for administrative costs associated with
14the program which are approved by the [department]
15authority.

16(2) Money from the fund derived from appropriations
17specified for export financing assistance may be deposited by
18the [department] authority in banks or trust companies in
19special accounts. The special accounts must be continuously
20secured by a pledge of direct obligations of the United
21States or of the Commonwealth having an aggregate market
22value, exclusive of accrued interest, at least equal to the
23balance on deposit in the account. The securities shall be
24deposited with the [department] authority to be held by a
25trustee or agent satisfactory to the [department] authority.
26Banks and trust companies are authorized to give security
27under this paragraph. Money in these special accounts shall
28be paid out on order of the [department] authority.

29(d) Use of Pollution Prevention Assistance Account.--Money
30in the Pollution Prevention Assistance Account may be used by

1the [department] authority to provide loans to small businesses
2for the adoption or installation of pollution-prevention or
3energy-efficient equipment or processes in accordance with
4section 2309 (relating to pollution prevention assistance
5loans).

6Section 3. Section 2305 heading, (a) introductory paragraph,
7(4) and (5), (b) introductory paragraph, (1) and (3)
8introductory paragraph of Title 12 are amended, subsection (a)
9is amended by adding a paragraph and the section is amended by
10adding a subsection to read:

11§ 2305. [Department] Authority responsibilities.

12(a) General rule.--The [department] authority shall do all
13of the following:

14* * *

15(4) Approve standards for [area loan] certified economic 
16development organization application fees.

17[(5) Approve community development financial
18institutions.]

19(6) Except as provided under section 2306(c)(iii)
20(relating to capital development loans), determine the job
21retention or job creation requirements for each project
22financed in whole or in part through a loan or line of credit
23made under this chapter.

24(b) Program.--In administering the program, the [department]
25authority may do any of the following:

26(1) Provide grants or other financial assistance to
27[area loan] certified economic development organizations for
28any of the following purposes:

29(i) To establish loan reserve funds.

30(ii) To reimburse loan losses to commercial banks

1and other financial institutions as a means of
2encouraging the expansion and financing of small
3businesses.

4* * *

5(3) Utilize the outstanding portfolio of loans and lines 
6of credit made under this chapter to raise additional funds
7by selling, securing, hypothecating or otherwise using such
8loan proceeds as a financing vehicle if the funds raised are
9used by the [department] authority for either of the
10following purposes:

11* * *

12(c) Additional powers.--In addition to the powers authorized
13under this chapter and 64 Pa.C.S. Ch. 11 (relating to
14Pennsylvania Industrial Development Authority), the board may
15administer the program by exercising the powers granted to it
16under the act of May 17, 1956 (1955 P.L.1609, No.537), known as
17the Pennsylvania Industrial Development Authority Act.

18Section 4. Sections 2306(a), (b)(1)(viii) and (2), (c), (d),
19(e)(1) and (2)(iii), (f) introductory paragraph and (9), (g)(1)
20and (2) and (h), 2307, 2308(a), (b)(1)(i), (iii) and (v) and
21(2), (c) heading (1) introductory paragraph, (2) and (3), (d),
22(e)(1) and (2), (f), (g)(1) and (2) and (h), 2309(a), (b), (c)
23(1) introductory paragraph and (i), (2) introductory paragraph
24and (3), (d), (e)(1), (f), (g)(1) and (2) and (h) and 2310(a),
25(b) introductory paragraph and (7), (c) introductory paragraph,
26(d), (e), (f)(1) and (2) and (g) of Title 12 are amended to
27read:

28§ 2306. Capital development loans.

29(a) Application.--A small business may submit an application
30and any applicable application fee to [its area loan] a
 

1certified economic development organization requesting a loan or 
2line of credit for certain costs of a capital development
3project under 64 Pa.C.S. § 1121 (relating to common application 
4process). The application shall be on the form required by the
5[department] authority and shall include or demonstrate all of
6the following, in addition to the contents required under 64 
7Pa.C.S. § 1121(b):

8(1) The name and address of the applicant.

9(2) A statement of the type and amount of [loan]
10assistance sought.

11(3) A statement of the capital development project,
12including a detailed statement of the cost of the project.

13(4) A financial commitment from a responsible source for
14any cost of the capital development project in excess of the
15amount requested.

16(5) Any other information required by the [department]
17authority.

18(b) [Area loan] Certified economic development organization
19review.--

20(1) Upon receipt of a completed application, [an area
21loan] a certified economic development organization shall
22investigate and determine all of the following:

23* * *

24(viii) If the applicant complied with all other
25criteria established by the [department] authority.

26(2) Upon being satisfied that all requirements have been
27met, the [area loan] certified economic development
28organizations shall recommend the applicant to the
29[department] authority and forward the application with all
30supporting documentation to the [department] authority for

1its review and approval.

2(c) [Department] Authority review.--

3(1) Within 30 days of receiving a recommendation and a
4completed application, the [department] authority shall
5review the application. If the [department] authority is
6satisfied that all requirements have been met, the
7[department] authority may approve the loan request in
8accordance with the following:

9(i) A loan for land, buildings and machinery and
10equipment may not exceed [$200,000] $400,000 or 50% of
11the total capital development project costs, whichever is
12less. For the purposes of this subparagraph, capital
13development project costs incurred during the 12-month
14period prior to the date of submission of the application
15to the [department] authority shall be considered part of
16the total capital development project costs.

17(ii) A loan or line of credit for working capital
18may not exceed $100,000 [or 50% of the total capital
19development project costs, whichever is less].

20(iii) Except for loans to agricultural producers, a
21loan must create or preserve one job for every $25,000
22loaned. The authority may, by submitting notice to the 
23Legislative Reference Bureau for publication in the 
24Pennsylvania Bulletin, periodically update the amount 
25under this subparagraph, based on changes in unemployment 
26statistics, inflation, the authority's cash flow and the 
27need to keep this Commonwealth and the businesses of this 
28Commonwealth competitive.

29(2) The [department] authority shall notify the [area
30loan] certified economic development organization and

1applicant of its decision.

2(d) Approvals.--For applications which are approved, the
3[department] authority shall draw an advance equal to the
4principal amount of the loan from the fund. The advance shall be
5forwarded to the [area loan] certified economic development
6organization and, upon receipt by the [area loan] certified 
7economic development organization, shall become an obligation of
8the [area loan] certified economic development organization.
9Prior to providing loan funds to the applicant, the [area loan]
10certified economic development organization shall require the
11applicant to execute a note and to enter into a loan agreement.
12In addition to the requirements of subsection (e), the loan
13agreement shall include a provision requiring the recipient to
14use the loan proceeds to pay the costs of the capital
15development project. The [department] authority may require the
16[area loan] certified economic development organization to
17impose other terms and conditions on the recipient if the
18[department] authority determines that they are in the best
19interests of this Commonwealth, including a provision requiring
20collateral for any penalty imposed under subsection (g).

21(e) Loan terms.--A loan agreement entered into in accordance
22with subsection (c) shall do all of the following:

23(1) State the collateral securing the loan. All loans
24shall be secured by lien positions on collateral at the
25highest level of priority as may be determined by the [area
26loan] certified economic development organization with the
27approval of the [department] authority.

28(2) State the repayment period in accordance with the
29following:

30* * *

1(iii) A loan or line of credit for working capital
2shall have a repayment period of up to three years. A 
3line of credit may be renewed for an additional three-
4year period at the discretion of the authority.

5* * *

6(f) Loan administration.--A loan made under this section
7shall be administered in accordance with [departmental]
8authority policies and procedures by the [area loan] certified 
9economic development organization which made the loan. Each
10[area loan] certified economic development organization shall
11submit an annual report on the form required by the [department]
12authority and which includes or demonstrates all of the
13following:

14* * *

15(9) Any other information or documentation required by
16the [department] authority.

17(g) Penalty.--

18(1) Except as provided in paragraph (2), the
19[department] authority shall impose a penalty upon a
20recipient if the recipient fails to create or preserve the
21number of employment opportunities specified in its approved
22application.

23(2) The [department] authority may waive the penalty
24required by paragraph (1) if the [department] authority
25determines that the failure was due to circumstances outside
26the control of the recipient.

27* * *

28(h) Defaults.--The [department] authority may by foreclosure
29take title to a capital development project which it financed if
30acquisition is necessary to protect a loan made under this

1section. The [department] authority shall pay all costs arising
2out of the foreclosure and acquisition from moneys held in the
3fund. The [department] authority may, in order to minimize
4financial losses and sustain employment, lease the capital
5development project. The [department] authority may withdraw
6moneys from the fund to purchase first mortgages and to make
7payments on first mortgages on any capital development project
8which it financed where purchase or payment is necessary to
9protect a loan made under this section. The [department]
10authority may sell, transfer, convey and assign the first
11mortgages and shall deposit any moneys derived from the sale of
12any first mortgages in the fund.

13§ 2307. EDA loans.

14(a) Application and administration procedures.--The
15[department] authority shall establish application and
16administration procedures to be used for EDA loans. The
17procedures shall be established by guidelines and shall conform
18in all respects to those procedures required or established by
19the Economic Development Administration for use of Federal funds
20under the Public Works and Economic Development Act of 1965
21(Public Law 89-136, 42 U.S.C. § 3121 et seq.) and, if 
22applicable, 64 Pa.C.S. § 1121 (relating to common application 
23process).

24(b) Eligibility for EDA loans.--The [department] authority
25shall establish eligibility requirements to be used for EDA
26loans. The requirements shall be established by guidelines and
27shall conform in all respects to those procedures required or
28established by the Economic Development Administration for use
29of Federal funds under the Public Works and Economic Development
30Act of 1965.

1§ 2308. Loans in distressed communities.

2(a) Application.--A small business located in a distressed
3community may submit an application and any applicable
4application fee to a [community development institution]
5certified economic development organization requesting a loan or 
6line of credit for certain costs of a capital development
7project under 64 Pa.C.S. § 1121(a) (relating to common 
8application process). The application shall be on the form
9required by the [department] authority and shall include or
10demonstrate all of the following, in addition to the contents 
11required under 64 Pa.C.S. § 1121(b):

12(1) The name and address of the applicant.

13(2) A statement that the small business is engaged in
14business-to-public service or in the mercantile, commercial
15or point-of-sale retail business sectors.

16(3) A statement of the type and amount of [loan]
17assistance sought.

18(4) A statement of the capital development project,
19including a detailed statement of the cost of the project.

20(5) A financial commitment from a responsible source for
21the cost of the capital development project in excess of the
22amount requested.

23(6) Any other information required by the [department]
24authority.

25(b) [Community development institution] Certified economic 
26development organization review.--

27(1) Upon receipt of a completed application, a
28[community development institution] certified economic 
29development organization shall investigate and determine all
30of the following:

1(i) If the applicant is a small business which is
2engaged in business-to-public service or in the
3mercantile, commercial or point-of-sale retail business
4sectors in accordance with conditions or criteria
5established by the [department] authority.

6* * *

7(iii) If the applicant has demonstrated a direct
8impact on the community in which the capital development
9project is or will be located, on residents of that
10community or on the local and/or regional economy. The
11[department] authority shall establish criteria that will
12assist in making this demonstration.

13* * *

14(v) If the applicant complied with all other
15criteria established by the [department] authority.

16(2) Upon being satisfied that all requirements have been
17met, the [community development institution] certified 
18economic development organization shall recommend the
19applicant to the [department] authority and forward the
20application with all supporting documentation to the
21[department] authority for its review and approval.

22(c) [Department] Authority review.--

23(1) Upon receipt of a recommendation and a completed
24application, the [department] authority shall investigate and
25determine all of the following:

26* * *

27(2) If the [department] authority is satisfied that all
28requirements have been met, the [department] authority may
29approve the loan or line of credit request in an amount not
30to exceed $200,000 or 50% of the total capital development

1project costs, whichever is less. For the purpose of this
2paragraph, capital development project costs, except the
3costs related to working capital, incurred during the 12-
4month period prior to the date of submission of the
5application to the [department] authority shall be considered
6part of the total capital development project costs.

7(3) The [department] authority shall notify the
8[community development institution] certified economic 
9development organization and applicant of its decision.

10(d) Approvals.--For applications which are approved, the
11[department] authority shall draw an advance equal to the
12principal amount of the loan from the fund and, prior to
13providing loan funds to the applicant, the [department]
14authority shall require the applicant to execute a note and to
15enter into a loan agreement. In addition to the requirements of
16subsection (e), the loan agreement shall include a provision
17requiring the recipient to use the loan proceeds to pay the
18costs of the capital development project. The [department]
19authority may impose other terms and conditions on the recipient
20if the [department] authority determines they are in the best
21interests of this Commonwealth, including a provision requiring
22collateral for any penalty imposed under subsection (g).

23(e) Loan terms.--A loan agreement entered into in accordance
24with subsection (d) shall do all of the following:

25(1) State any collateral securing the loan. The
26[department] authority may use its best judgment to identify
27and secure collateral.

28(2) State the repayment period which may be flexible[.], 
29except that a line of credit may not have a term of more than 
30three years. A line of credit may be renewed for an
 

1additional three-year period at the discretion of the 
2authority.

3* * *

4(f) Loan administration.--A loan made under this section
5shall be administered in accordance with [departmental]
6authority policies and procedures.

7(g) Penalty.--

8(1) Except as provided in paragraph (2), the
9[department] authority shall impose a penalty upon a
10recipient if the recipient fails to preserve the number of
11employment opportunities specified in its approved
12application.

13(2) The [department] authority may waive the penalty
14required by paragraph (1) if the [department] authority
15determines that the failure was due to circumstances outside
16the control of the recipient.

17* * *

18(h) Defaults.--The [department] authority may take title by
19foreclosure to a capital development project which it financed
20where acquisition is necessary to protect a loan made under this
21section. The [department] authority shall pay all costs arising
22out of the foreclosure and acquisition from money held in the
23fund. The [department] authority may, in order to minimize
24financial losses and sustain employment, lease the capital
25development project. The [department] authority may withdraw
26money from the fund to purchase first mortgages and to make
27payments on first mortgages on any capital development project
28which it financed if purchase or payment is necessary to protect
29a loan made under this section. The [department] authority may
30sell, transfer, convey and assign the first mortgages and shall

1deposit in the fund money derived from the sale of any first
2mortgages.

3§ 2309. Pollution prevention assistance loans.

4(a) Application.--A small business may submit an application
5and any application fee to a [pollution prevention assistance
6agency] certified economic development organization requesting a
7loan for a pollution prevention infrastructure under 64 Pa.C.S. 
8§ 1121(a) (relating to common application process). The
9application shall be on the form required by the [department]
10authority and shall include or demonstrate all of the following, 
11in addition to the contents required under 64 Pa.C.S. § 1121(b):

12(1) The name and address of the applicant.

13(2) A statement of the amount of loan assistance sought.

14(3) A statement of the pollution prevention
15infrastructure, including a detailed statement of the cost of
16the infrastructure.

17(4) A financial commitment from a responsible source for
18the cost of the pollution prevention infrastructure in excess
19of the amount requested.

20(5) Any other information required by the [department]
21authority.

22(b) [Pollution prevention assistance agency] Certified 
23economic development organization review.--

24(1) Upon receipt of a completed application, a
25[pollution prevention assistance agency] certified economic 
26development organization shall investigate and determine all
27of the following:

28(i) If the applicant is a small business.

29(ii) If the project is for pollution prevention
30infrastructure.

1(iii) If the applicant complied with all other
2criteria established by the [department] authority.

3(2) Upon being satisfied that all requirements have been
4met, the [pollution prevention assistance agency] certified 
5economic development organization shall recommend the
6applicant to the department and forward the application with
7all supporting documentation to the [department] authority
8for its review and approval.

9(c) [Department] Authority review.--

10(1) Upon receipt of a recommendation and a completed
11application, the [department] authority shall investigate and
12determine all of the following:

13(i) If the pollution prevention infrastructure
14demonstrates a substantial likelihood of preventing or
15reducing pollution. The Department of Environmental
16Protection shall assist the [department] authority in
17reviewing the applications and provide technical
18assistance.

19* * *

20(2) If the [department] authority is satisfied that all
21requirements have been met, the [department] authority may
22approve the loan request. A loan approved under this
23subsection may not exceed the lesser of:

24* * *

25(3) The [department] authority shall notify the
26[pollution prevention assistance agency] certified economic 
27development organization and applicant of its decision.

28(d) Approvals.--For applications which are approved, the
29[department] authority shall draw an advance equal to the
30principal amount of the loan from the Pollution Prevention

1Assistance Account. Prior to providing loan funds to the
2applicant, the [department] authority shall require the
3applicant to execute a note and to enter into a loan agreement.
4In addition to the requirements of subsection (e), the loan
5agreement shall include a provision requiring the recipient to
6use the loan proceeds to pay the costs of the pollution
7prevention infrastructure. The [department] authority may impose
8other terms and conditions on the recipient if the [department]
9authority determines they are in the best interests of this
10Commonwealth, including a provision requiring collateral for any
11penalty imposed under subsection (g).

12(e) Loan terms.--A loan agreement entered into in accordance
13with subsection (d) shall do all of the following:

14(1) State the collateral securing the loan. All loans
15shall be secured by lien positions on collateral at the
16highest level of priority as may be determined by the
17[department] authority.

18* * *

19(f) Loan administration.--A loan made under this section
20shall be administered in accordance with [departmental]
21authority policies and procedures.

22(g) Penalty.--

23(1) Except as provided in paragraph (2), the
24[department] authority shall impose a penalty upon a
25recipient if the recipient fails to carry out the pollution
26prevention infrastructure project as specified in its
27approved application.

28(2) The [department] authority may waive the penalty
29required by paragraph (1) if the [department] authority
30determines that the failure was due to circumstances outside

1the control of the recipient.

2* * *

3(h) Defaults.--The [department] authority may take title by
4foreclosure to a pollution prevention infrastructure which it
5financed if acquisition is necessary to protect a loan made
6under this section. The [department] authority shall pay all
7costs arising out of the foreclosure and acquisition from money
8held in the Pollution Prevention Assistance Account. The
9[department] authority may, in order to minimize financial
10losses and sustain employment, lease the pollution prevention
11infrastructure. The [department] authority may withdraw money
12from the Pollution Prevention Assistance Account to purchase
13first mortgages and to make payments on first mortgages on any
14pollution prevention infrastructure which it financed if the
15purchase or payment is necessary to protect a loan made under
16this section. The [department] authority may sell, transfer,
17convey and assign the first mortgages and shall deposit any
18money derived from the sale of any first mortgages in the
19Pollution Prevention Assistance Account.

20§ 2310. Export financing loans.

21(a) Application.--A person may submit an application and any
22applicable application fee to [the department or its area loan]
23a certified economic development organization requesting a loan
24for certain costs of a capital development project which will be
25used in export activities under 64 Pa.C.S. § 1121(a) (relating 
26to common application process). The application must be on the
27form required by the [department] authority and must include or
28demonstrate all of the following, in addition to the contents 
29required under 64 Pa.C.S. § 1121(b):

30(1) The name and address of the applicant.

1(2) A statement of the amount of loan assistance sought.

2(3) A statement of the capital development project,
3including a detailed statement of the cost of the project.

4(4) A financial commitment from a responsible source for
5any cost of the capital development project in excess of the
6amount requested.

7(5) A statement that the loan, if approved, would not
8supplant funding from private sector sources on commercially
9reasonable terms.

10(6) Any other information required by the [department] 
11authority.

12(b) Review.--Upon receipt of a completed application, the
13[department] authority shall investigate and determine all of
14the following:

15* * *

16(7) If the applicant complied with all other criteria
17established by the [department] authority.

18(c) Approvals.--If the [department] authority is satisfied
19that all requirements have been met, the [department] authority
20may approve the loan request. A loan approved under this section
21may not exceed $350,000. The [department] authority shall notify
22the applicant and, if applicable, the [area loan] certified 
23economic development organization of its decision. The
24[department] authority shall reserve an amount equal to the
25principal amount of the loan within the fund or the special
26account authorized by section 2304(c)(2) (relating to fund and
27accounts). Prior to providing funds to the applicant, the
28[department] authority shall require the applicant to execute a
29note and enter into a loan agreement. In addition to the
30requirements of subsection (d), the loan agreement shall include

1a provision requiring the recipient to use the loan proceeds to
2pay the costs of the capital development project. The
3[department] authority may impose other terms and conditions on
4the recipient if the [department] authority determines they are
5in the best interests of this Commonwealth, including any of the
6following:

7* * *

8(d) Loan terms.--A loan agreement entered into in accordance
9with subsection (c) shall do all of the following:

10(1) State the collateral securing the loan. All loans
11shall be secured by lien positions on collateral at the
12highest level of priority as may be determined by the
13[department] authority.

14(2) State the repayment period as determined by the
15[department] authority.

16(3) State the interest rate as determined by the
17[department] authority.

18(e) Loan administration.--A loan made under this section
19shall be administered in accordance with [departmental] 
20authority policies and procedures.

21(f) Penalty.--

22(1) Except as provided in paragraph (2), the
23[department] authority shall impose a penalty upon a
24recipient if the recipient fails to carry out the export
25activities specified in its approved application.

26(2) The [department] authority may waive the penalty
27required by paragraph (1) if the [department] authority
28determines that the failure was due to circumstances outside
29the control of the recipient.

30* * *

1(g) Defaults.--The [department] authority may, by
2foreclosure, take title to a capital development project which
3it financed if acquisition is necessary to protect a loan made
4under this section. The [department] authority shall pay all
5costs arising out of the foreclosure and acquisition from money
6held in the fund or a special account authorized by section
72304(c)(2). The [department] authority may, in order to minimize
8financial losses and sustain employment, lease the capital
9development project. The [department] authority may withdraw
10money from the fund or a special account authorized by section
112304(c)(2) to purchase first mortgages and to make payments on
12first mortgages on any capital development project which it
13financed if purchase or payment is necessary to protect a loan
14made under this section. The [department] authority may sell,
15transfer, convey and assign the first mortgages and shall
16deposit any money derived from the sale of any first mortgages
17in the fund or a special account authorized by section 2304(c)
18(2).

19Section 5. Title 12 is amended by adding a section to read:

20§ 2310.1. Delegation.

21For loans authorized under section 2306 (relating to capital
22development loans), 2307 (relating to EDA loans), 2308 (relating
23to loans in distressed communities), 2309 (relating to pollution
24prevention assistance loans) or 2310 (relating to export
25financing loans), the board may delegate the review and approval
26of applications totaling less than $200,000 to the authorized
27staff of the authority by adopting a resolution authorizing the
28delegation, subject to any conditions established by the board.
29The resolution must do all of the following:

30(1) Enumerate the qualifications and training required

1for authority staff to be authorized to review and approve
2applications.

3(2) Set loan guidelines and underwriting standards for
4the authorized staff to follow during the review and approval
5of applications.

6(3) Require authorized staff to provide a monthly report
7to the board of all actions to a pending or approved
8application taken during the reporting period.

9Section 6. Section 2311 of Title 12 is amended to read:

10§ 2311. Reporting and inspection.

11(a) Inspection.--An applicant or a recipient shall, upon
12request, permit authorized employees of the [department]
13authority or its agent to inspect the plant, books and records
14of the applicant or recipient.

15(b) Updating.--An applicant or a recipient shall provide
16updated information to the [department] authority and its agents
17if conditions change or to the extent that the information
18originally given becomes inaccurate or misleading.

19(c) Periodic reports.--A recipient shall provide the
20[department] authority and its agents with such periodic
21financial reports as the [department] authority may require
22until the loan is repaid in full.

23(d) Financial and performance audits.--An agent of the
24[department] authority shall annually submit to the [department]
25authority, at the agent's expense, an independent financial
26audit. If the audit reveals misconduct of a material nature on
27the part of the agent, the [department] authority shall take
28appropriate action.

29Section 7. Section 2902 of Title 12 is amended by adding
30definitions to read:

1§ 2902. Definitions.

2The following words and phrases when used in this chapter
3shall have the meanings given to them in this section unless the
4context clearly indicates otherwise:

5"Authority." The Pennsylvania Industrial Development
6Authority organized and existing under the act of May 17, 1956 
7(1955 P.L.1609, No.537), known as the Pennsylvania Industrial 
8Development Authority Act.

9"Board." The board of directors of the authority.

10* * *

11"Program." The Machinery and Equipment Loan Program
12established under section 2903 (relating to establishment).

13Section 8. Sections 2903, 2905(a) introductory paragraph and
14(1)(iv) and (v) and (c), 2906(a), (b), (c) introductory
15paragraph and (14), (d), (e) and (f), 2907, 2908, 2909, 2910,
162911 and 2912 of Title 12 are amended to read:

17§ 2903. Establishment.

18There is established [within the department] a program to be
19known as the Machinery and Equipment Loan Program. The program
20shall be administered by the [department] authority and provide
21loans to business enterprises for machinery and equipment.

22§ 2905. Eligibility for loans; terms and conditions.

23(a) Loans; general rules.--The [secretary] authority may
24make advances from the fund, subject to the terms, conditions
25and restrictions provided under this chapter, for the purpose of
26making loans to business enterprises involved in industrial
27processes, mining, manufacturing, production agriculture,
28information technology, biotechnology, service as a medical
29facility or other industrial or technology sectors, as defined
30by the [department] authority, to acquire and install new

1machinery and equipment or upgrade existing machinery and
2equipment, including the acquisition, application and
3utilization of computer hardware and software.

4(1) All loans shall be subject to all of the following
5conditions:

6* * *

7(iv) Be limited to projects that demonstrate the
8creation or retention of one job for every $25,000
9received from the fund. This subparagraph does not apply
10to loans made to business enterprises involved in
11production agriculture or to loans made to medical
12facilities. The authority may, by submitting notice to 
13the Legislative Reference Bureau for publication in the 
14Pennsylvania Bulletin, periodically update the amount 
15under this subparagraph, based on changes in unemployment 
16statistics, inflation, the authority's cash flow and the 
17need to keep this Commonwealth and the businesses of this 
18Commonwealth competitive.

19(v) Have an interest rate which shall be established
20by the [secretary] authority.

21* * *

22(c) Security.--All loans shall be secured by no less than a 
23second lien position on the equipment purchased and other 
24sufficient collateral as determined by the [secretary] 
25authority.

26§ 2906. Application and administration.

27(a) Procedures.--Application and administration procedures
28for fund loans shall be established by the [secretary] authority 
29under 64 Pa.C.S. § 1121 (relating to common application 
30process).

1(b) Receipt.--The [secretary] authority shall receive
2applications from eligible business enterprises for machinery
3and equipment loans. Applications shall be made to the
4[secretary] authority in the form and manner as the [department] 
5authority may require.

6(c) Investigation.--Upon receipt of the application, the
7[secretary] authority shall investigate and review the
8application and either approve or disapprove the loan
9application by proper action of the [department] authority. The
10decision of the [secretary] authority shall be based, in whole
11or in part, upon the following criteria:

12* * *

13(14) Such information and documentation as the
14[secretary] authority shall require.

15(d) Notification.--The [secretary] authority shall notify
16the applicant of final approval or disapproval of the loan
17application within a reasonable period of time following the
18receipt of the application. In the case of approval of a loan
19application, the [secretary] authority shall arrange to draw the
20loan amount from the fund and advance the sum to the recipient.
21The advance shall be made available in the form of a loan
22transaction, which loan shall be evidenced by a note executed by
23the recipient and secured in a manner as the [secretary] 
24authority shall require in conformity in all respects to the
25loan as approved by the [secretary] authority.

26(e) Policy requirements [and report].--All loans shall be
27administered and monitored by the [department] authority in
28accordance with the policies and procedures prescribed by the
29[secretary] authority. [On or before September 1 of each year,
30the secretary shall prepare a report that includes the

1following:

2(1) Each outstanding loan.

3(2) The date of approval.

4(3) The original principal balance.

5(4) The current principal balance.

6(5) The interest rate.

7(6) The purpose for which the loan was made.

8(7) An enumeration of any problems or issues which have
9arisen with regard to each loan.

10(8) A statement regarding the progress of the business
11enterprise in creating and retaining its requisite number of
12employment opportunities.

13(9) Such other information and documentation as the
14secretary shall require.]

15(f) Penalty for noncompliance.--In the event that a loan
16recipient [shall] does not comply with its approved application
17by failing to create or preserve the number of employment
18opportunities specified in its approved application, the
19[secretary] authority shall impose a penalty equal to an
20increase in the interest rate to 2% greater than the current
21prime interest rate for the remainder of the loan unless the
22penalty is waived by the [secretary] authority because the
23failure is due to circumstances outside the control of the loan
24recipient. The penalty shall be payable in installments that the
25[secretary] authority deems appropriate.

26§ 2907. Powers of [secretary] authority.

27The [secretary] authority shall have and may exercise all 
28powers and authority necessary to the proper administration and 
29implementation of this chapter and shall have the authority to 
30adopt policies, procedures and guidelines and promulgate rules
 

1and regulations necessary to effectuate the provisions of this 
2chapter. In addition to any powers authorized under this chapter 
3and 64 Pa.C.S. Ch.11 (relating to Pennsylvania Industrial 
4Development Authority), the board may administer the program by 
5exercising the powers granted to it under the act of May 17, 
61956 (1955 P.L.1609, No.537), known as the Pennsylvania 
7Industrial Development Authority Act.

8§ 2908. Reporting and inspection.

9(a) Inspection.--Each business enterprise which applies for
10or receives assistance under this chapter, upon reasonable
11request of the [department] authority, shall permit duly
12authorized employees of the department or the authority to
13inspect the plant, books and records of the business enterprise.

14(b) Updating.--Each business enterprise shall update the
15information given to the [department] authority in its
16application if conditions change or to the extent that the
17information given originally becomes inaccurate or misleading.

18(c) Periodic reports.--Each recipient of assistance under
19this chapter shall provide the [department] authority with
20periodic financial reports as the [secretary] authority may
21require until such time as the loan is paid off.

22[§ 2909. Nondiscrimination.

23No loan shall be made to a business enterprise unless the
24business enterprise certifies to the department, in a form
25satisfactory to the department, that it shall not discriminate
26against any employee or any applicant for employment because of
27race, religion, color, national origin, sex or age. The business
28enterprise shall also certify to the department that it is not
29currently under citation for pollution violations and that in
30the future it will meet all applicable antipollution standards.

1§ 2910. Conflict of interest.

2No employee of the department shall, either directly or
3indirectly, be a party to or have any financial interest in any
4contract or agreement arising pursuant to this chapter.]

5§ 2911. Reports to General Assembly.

6(a) Annual reports.--On or before September 1 of each year,
7the [secretary] authority shall provide a report to the
8Secretary of the Senate and to the Chief Clerk of the House of
9Representatives. The report shall describe all relevant
10activities of the [department] authority pursuant to this
11chapter and shall include the following:

12(1) List of business enterprises receiving loans from
13the fund and the amounts and terms of this assistance.

14(2) Loan amounts repaid. Information under this
15paragraph may be reported in the aggregate.

16(3) Loans outstanding, balances due and any penalties
17imposed. Information under this paragraph may be reported in
18the aggregate.

19(4) Jobs created by businesses receiving funds in
20previous years. Information under this paragraph may be
21reported in the aggregate.

22(5) Other relevant information as determined by the
23[secretary] authority.

24(b) Availability of departmental reports.--Reports prepared
25by the secretary under section 2906(e) (relating to application
26and administration) shall be made available upon request to
27members of the General Assembly.

28§ 2912. Guidelines.

29The [department] authority shall develop written guidelines
30for the implementation of this chapter.

1Section 8.1. Title 12 is amended by adding a chapter to
2read:

3CHAPTER 30

4PENNSYLVANIA INDUSTRIAL DEVELOPMENT PROGRAM

5Sec.

63001. Scope of chapter.

73002. Definitions.

83003. Establishment.

93004. Industrial Development Fund.

103005. Application.

113006. Loans for industrial development projects.

123007. Loans for industrial parks.

133008. Loans for multiple-tenancy building projects.

143009. Reporting and inspection.

153010. Limitations.

163011. Job creation.

17§ 3001. Scope of chapter.

18This chapter relates to the Pennsylvania Industrial
19Development Program.

20§ 3002. Definitions.

21The following words and phrases when used in this chapter
22shall have the meanings given to them in this section unless the
23context clearly indicates otherwise:

24"Agricultural processor." An entity that adds value by
25subjecting one or more farm commodities to a process of
26manufacture, development or preparation for sale or a person
27that converts a farm product into a marketable form.

28"Agricultural producer." A person or entity involved in the
29management and use of an agricultural operation for the
30production of a farm commodity.

1"Agriculture." Any of the following:

2(1) The management and use of an agricultural operation
3for the production of a farm commodity.

4(2) The sale of a farm commodity at wholesale.

5(3) The sale of a farm commodity at retail by an urban
6and rural supermarket in an underserved area or farmers'
7markets.

8(4) An energy-related activity impacting production
9agriculture.

10(5) An activity which implements best industry practices
11related to an agricultural waste product, agriculture by-
12product or fertilizer.

13"Authority." The Pennsylvania Industrial Development
14Authority organized and existing under the act of May 17, 1956 
15(1955 P.L.1609, No.537), known as the Pennsylvania Industrial 
16Development Authority Act.

17"Board." The board of directors of the authority.

18"Fund." The Industrial Development Fund.

19"Industrial development project." A project sponsored by a
20certified economic development organization involving the
21acquisition or improvement of real property within this
22Commonwealth which will be occupied and operated by any of the
23following:

24(1) An industrial enterprise.

25(2) A manufacturing enterprise.

26(3) A research and development enterprise.

27(4) An agricultural producer.

28(5) An agricultural processor.

29"Industrial enterprise." An enterprise which has created or
30will create substantial employment opportunities. The term may

1include a warehouse, distribution and terminal facility and
2office building utilized as national or regional headquarters or
3computer or clerical operations centers. The term shall not
4include a mercantile, commercial or retail enterprise.

5"Industrial park project." A project sponsored by a
6certified economic development organization for the purpose of
7creating sites for the establishment of two or more industrial
8development projects.

9"Manufacturing enterprise." An enterprise which is engaged
10in the giving of a new shape, new quality or new combination to
11matter by the application of skill and labor.

12"Multiple-tenancy building project." A project sponsored by
13a certified economic development organization involving the
14acquisition or construction of land, site, structure or facility
15for occupancy by two or more industrial enterprises,
16manufacturing enterprises, research and development enterprises,
17agricultural producers or agricultural processors.

18"Program." The Pennsylvania Industrial Development Program
19established under section 3003 (relating to establishment).

20"Research and development enterprise." An enterprise for the
21discovery of new and the refinement of known substances,
22processes, products, theories and ideas. The term does not
23include an enterprise activity directed primarily to the
24accumulation or analysis of commercial, financial or mercantile
25data.

26§ 3003. Establishment.

27There is established within the authority a program to be
28known as the Pennsylvania Industrial Development Program. The
29program shall be administered by the authority to provide loans
30for industrial development projects, industrial parks and

1multiple-tenancy building projects, to increase employment
2levels and to improve the overall economic health of this
3Commonwealth.

4§ 3004. Industrial Development Fund.

5(Reserved).

6§ 3005. Application.

7A certified economic development organization may submit an
8application for assistance under this chapter and under 64
9Pa.C.S. § 1121(a) (relating to common application process). The
10application shall be on the form required by the authority and
11shall include or demonstrate all of the following, in addition
12to the contents required under 64 Pa.C.S. § 1121(b):

13(1) A general description of the type, classes and
14number of employees employed or to be employed in the
15operation of the project.

16(2) The cost or estimate of the cost of establishing the
17project. As used in this paragraph, the term "cost" shall
18include financing charges, including interest incurred before
19and during construction, but shall not include the cost of
20any machinery, equipment or fixtures necessary for the
21project or the installation or maintenance of any of the
22machinery, equipment or fixtures.

23(3) Financial statements of the applicant, proposed
24guarantors and any other party whose credit is significant to
25the approval of the financial assistance. By guideline, the
26authority may specify the period to be covered by the
27financial statements and whether they must be compiled,
28reviewed or prepared by a certified public accountant.

29(4) Evidence of the arrangement made by the borrower for
30the financing of all costs of the project exceeding the

1amount to be financed by the authority.

2(5) Evidence that the establishment of the project will
3not cause the removal of an industrial enterprise,
4manufacturing enterprise, research and development
5enterprise, agricultural producer or agricultural processor
6from one area of this Commonwealth to another area of this
7Commonwealth, as determined by the authority.

8(6) Evidence that the proposed project location has
9undergone an environmental assessment.

10(7) Any other information required by the authority.

11§ 3006. Loans for industrial development projects.

12The authority may contract to loan an amount not to exceed
1350% of the cost of establishing an industrial development
14project, subject to the following conditions:

15(1) Before making the loan, the authority shall
16determine that:

17(i) the borrower is responsible to assume all
18obligations imposed by the authority in connection with
19the project, financial or otherwise, and to undertake the
20operation of the project; and

21(ii) the borrower has obtained from other
22independent and responsible sources a firm commitment for
23any funds which, in addition to the loan and any other
24property or assets held by the borrower, are necessary
25for the completion and operation of the project.

26(2) The authority shall determine the interest rate and
27repayment period of the loan.

28(3) The loan must be evidenced by note of the borrower,
29and secured by a mortgage on the project for which the loan
30was made, subordinate only to the mortgage securing the first

1lien obligation issued to secure the commitment of funds
2provided to pay the cost of the project from the independent
3and responsible sources, and used in the financing of the
4project.

5(4) The authority may require additional security as it
6may deem necessary.

7§ 3007. Loans for industrial parks.

8The authority may contract to loan an amount not to exceed
975% of the cost of establishing an industrial park project,
10subject to the following conditions:

11(1) The authority shall determine the interest rate and
12repayment period of the loan.

13(2) The loan must be evidenced by note of the borrower
14and secured by a first mortgage on the industrial park or by
15participation in a first mortgage. If a Federal agency
16participates in the financing of the industrial park, the
17authority may take as security for its loan a mortgage on the
18industrial park which is second only to the mortgage given to
19the Federal agency.

20(3) If the loan is secured by participation in a first
21mortgage on the industrial park, a portion of the loan, not
22to exceed 10% of the cost of the project, may be secured by a
23second mortgage on the industrial park which is second only
24to the participating first mortgage.

25§ 3008. Loans for multiple-tenancy building projects.

26The authority may contract to loan an amount not to exceed
2750% of the cost of establishing a multiple-tenancy building
28project, subject to the following conditions:

29(1) The authority shall determine the interest rate and
30repayment period of the loan.

1(2) The loan must be evidenced by note of the borrower
2and secured by a first mortgage or participation in a first
3mortgage on the multiple-tenancy building project.

4(3) The authority may contract to loan an amount not to
5exceed 50% of the cost of the project if the loan is secured
6by a first mortgage or participation in a first mortgage on
7the project. If the loan is not secured by a first mortgage
8or participation in a first mortgage on the project, the
9authority may contract to loan an amount not to exceed 40% of
10the cost of the project.

11(4) If the loan is secured by a participation in a first
12mortgage on the project, the authority may permit a portion
13of its loan, not to exceed 10% of the cost of the project, to
14be secured by a second mortgage on the project which is
15second only to the participating first mortgage.

16§ 3009. Reporting and inspection.

17(a) Inspection.--An applicant or a recipient shall, upon
18request, permit authorized employees of the authority or its
19agent to inspect the plant, books and records of the applicant
20or recipient.

21(b) Updating.--An applicant or a recipient shall provide
22updated information to the authority and its agents if
23conditions change or to the extent that the information
24originally given becomes inaccurate or misleading.

25(c) Periodic reports.--A recipient shall provide the
26authority and its agents with periodic financial reports as the
27authority may require until the loan is repaid in full.

28(d) Financial and performance audits.--A recipient shall
29annually submit to the authority, at the recipient's expense, an
30independent financial audit. If the audit reveals misconduct of

1a material nature on the part of the recipient, the authority
2shall take appropriate action.

3§ 3010. Limitations.

4A loan may not be recommended or approved if the proceeds of
5the loan could do any of the following:

6(1) Cause, aid or assist directly in the relocation of
7any business operations from one part of this Commonwealth to
8another unless there is at least a 25% net increase in
9employment.

10(2) Refinance any portion of the total cost of an
11industrial development project, industrial park or multiple-
12tenancy building project or other existing loans or debt.

13(3) Finance an industrial development project,
14industrial park or multiple-tenancy building project located
15outside the geographic boundaries of this Commonwealth.

16(4) Provide funds, directly or indirectly, for payment
17distribution or as loan owners, partners or shareholders of a
18small business, except as ordinary compensation for services
19rendered.

20(5) Provide funds for speculation in real or personal
21property, whether tangible or intangible.

22§ 3011. Job creation.

23The authority shall establish minimum levels of job creation
24for loans under this chapter, or a requirement that one new job
25be created for a certain amount of funds loaned. In establishing
26the minimum levels of job creation, the authority shall consider
27unemployment statistics, inflation, the authority's cash flow
28and the need to keep this Commonwealth and the businesses of
29this Commonwealth competitive. Notice of job creation
30requirements must be submitted to the Legislative Reference

1Bureau for publication in the Pennsylvania Bulletin.

2Section 8.2. Title 12 is amended by adding a part heading
3immediately preceding Chapter 51 to read:

4PART IV

5COMMERCIAL PROTECTION

6Chapter

751. Fraudulent Transfers

853. Trade Secrets

9Section 8.3. The heading of Part IV of Title 12 is repealed:

10[PART IV

11ECONOMIC DEVELOPMENT AND FINANCING (Reserved)]

12Section 9. The heading of Chapter 11 of Title 64 is amended
13to read:

14CHAPTER 11

15PENNSYLVANIA INDUSTRIAL DEVELOPMENT AUTHORITY

16[(Reserved)]

17Section 9.1. Chapter 11 of Title 64 is amended by adding
18subchapters to read:

19SUBCHAPTER A

20GENERAL PROVISIONS

21Sec.

221101. Scope of chapter.

231102. Definitions.

24§ 1101. Scope of chapter.

25This chapter relates to the Pennsylvania Industrial
26Development Authority.

27§ 1102. Definitions.

28The following words and phrases when used in this chapter
29shall have the meanings given to them in this section unless the
30context clearly indicates otherwise:

1"Application." A request for financial assistance from the
2programs.

3"Authority." The Pennsylvania Industrial Development
4Authority organized and existing under the act of May 17, 1956 
5(1955 P.L.1609, No.537), known as the Pennsylvania Industrial 
6Development Authority Act.

7"Board." The board of directors of the authority.

8"Certified economic development organization." An entity
9certified by the authority under section 1123 (relating to
10certification of economic development organizations).

11"Department." The Department of Community and Economic
12Development of the Commonwealth.

13"Industrial Development Fund." The fund established under
14section 8 of the act of May 17, 1956 (1955 P.L.1609, No.537), 
15known as the Pennsylvania Industrial Development Authority Act.

16"Machinery and Equipment Loan Fund." The fund established
17under 12 Pa.C.S. § 2904 (relating to Machinery and Equipment
18Loan Fund).

19"Machinery and Equipment Loan Program." The program
20authorized by 12 Pa.C.S. Ch. 29 (relating to machinery and
21equipment loans).

22"Pennsylvania Industrial Development Program." The program
23authorized under 12 Pa.C.S. Ch. 30 (relating to Pennsylvania
24Industrial Development Program).

25"Pollution Prevention Assistance Account." The account
26continued under 12 Pa.C.S. § 2304 (relating to fund and
27accounts).

28"Programs." Any of the following:

29(1) The Small Business First Program.

30(2) The Machinery and Equipment Loan Program.

1(3) The Pennsylvania Industrial Development Program.

2(4) All programs authorized by the act of May 17, 1956
3(1955 P.L.1609, No.537), known as the Pennsylvania Industrial
4Development Authority Act.

5"Small Business First Fund." The fund continued under 12
6Pa.C.S. § 2304 (relating to fund and accounts).

7"Small Business First Program." The program authorized by 12
8Pa.C.S. Ch. 23 (relating to small business first).

9SUBCHAPTER B

10STRUCTURES AND POWERS

11(Reserved)

12SUBCHAPTER C

13PROGRAM MANAGEMENT

14Sec.

151120. Program management.

161121. Common application process.

171122. Regulations.

181123. Certification of economic development organizations.

191124. Transfer of funds.

201125. Conflict of interest.

21§ 1120. Program management.

22The authority shall operate the programs in a coordinated and
23integrated manner, utilizing to the maximum extent possible the
24same criteria and standards in defining and administering the
25projects to be funded under the programs.

26§ 1121. Common application process.

27(a) Preparation.--An application for assistance under the
28programs must be prepared and approved by a certified economic
29development organization before it is submitted to the
30authority, and the application shall comply with any additional

1requirements of the programs.

2(b) Contents.--The application, which shall be in the form
3required by the authority, shall include the following
4information, where applicable:

5(1) The applicant's name.

6(2) The applicant's address.

7(3) A description of the type and amount of financial
8assistance requested.

9(4) A description of the applicant's business or, if the
10applicant is not the borrower, the borrower's business,
11including all of the following:

12(i) The type of business conducted.

13(ii) The location of the business.

14(iii) The date the business was established.

15(iv) The address of the business, including the
16address of all offices of the business located in this
17Commonwealth.

18(v) The name and address of each principal.

19(vi) The number of current employees and an estimate
20of future employees.

21(5) A description of the project, including all of the
22following:

23(i) The location of the project.

24(ii) The total estimated cost of the project, as
25calculated by an engineer or other qualified
26professional.

27(iii) An identification of all sources of capital
28for the project.

29(iv) A legal description of all real property held
30or to be acquired for the establishment of the project.

1(v) A general description and statement of value of
2any real or personal property of the applicant and, if
3applicable, the buyer or tenant of the project, to be
4applied to the establishment of the project.

5(6) A statement that the project is consistent with any
6existing comprehensive county plan where the project is
7located.

8(7) A firm commitment from the intended project user to
9use the project upon completion.

10(8) A brief description of the anticipated economic
11impact to this Commonwealth and the host municipality and
12county as a result of the project.

13(9) Any plans or other documents as may be required to
14show the type, structure and general character of the
15project.

16(10) A statement that the applicant certifies to the
17authority that it will not discriminate against any employee
18or any applicant for employment because of race, religion,
19color, national origin, sex or age.

20(11) A statement that the applicant certifies to the
21authority that it is not currently under citation for
22pollution violations and that in the future it will meet all
23applicable antipollution standards.

24(12) Any information required by the program under which
25financial assistance may be provided.

26(13) Any other information required by the authority.

27(c) Review and approval.--

28(1) In reviewing the application, the authority shall
29consider the following, where applicable:

30(i) Whether the value of the proposed collateral and

1the financial resources offered by the applicant are
2sufficient to repay the loan.

3(ii) Whether the project will enable future
4employment opportunities in or have a net positive
5economic impact on the surrounding community.

6(iii) Whether the statement of the estimated cost of
7the project is reasonable.

8(iv) Whether the sources of financial commitments
9for funds in excess of the amount requested under this
10subchapter are reliable.

11(v) Whether the applicant has complied with terms
12required by the programs and under this subchapter.

13(vi) Whether the applicant has a history of
14investment in Pennsylvania-related companies.

15(vii) Whether the applicant has demonstrated strong
16relationships with organizations in this Commonwealth
17which foster economic development.

18(viii) Whether the applicant has a strong
19performance record.

20(ix) Whether the applicant has demonstrated an
21ability to meet and satisfy debt service, if applicable,
22as it becomes due and payable.

23(x) Whether the applicant has any outstanding
24environmental violations.

25(xi) Any other information deemed to be relevant by
26the authority.

27(2) Subject to any applicable limitations under this
28subchapter, the amount, duration, interest rate, security
29required and any other terms of the loan shall be determined
30at the discretion of the authority based upon its

1determination of the potential financial risk to the
2Commonwealth.

3(3) Financial assistance may not be approved if the
4proceeds would be used to:

5(i) refinance any portion of the total cost of a
6capital development project, pollution prevention
7infrastructure or other existing loans or debt;

8(ii) finance a project located outside the
9geographic boundaries of this Commonwealth;

10(iii) relocate a business to another part of this
11Commonwealth, unless approved in advance by the authority
12which shall consider the negative economic impact on the
13community that the business is leaving; or

14(iv) provide funds, directly or indirectly, for
15payment distribution or as a loan to owners, partners or
16shareholders of a small business, except as ordinary
17compensation for services rendered.

18(4) (i) The terms of all agreements for financial
19assistance awarded under this subchapter shall include
20any material terms, requirements or other conditions
21provided for agreements entered into under this
22subchapter. The authority may impose other terms and
23conditions if it determines that they are in the best
24interests of the Commonwealth, including a provision
25requiring collateral for any penalty which may be
26imposed.

27(ii) Upon approving an application for a loan under
28the programs, the authority shall draw an advance equal
29to the principal amount of the loan from the appropriate
30account and, before disbursing loan funds to the

1applicant, require the applicant to execute a note and to
2enter into a loan agreement and any other agreement as
3the authority may require.

4(d) Review and notice.--Upon reviewing the application, the
5authority shall notify the applicant and the certified economic
6development organization of its decision or request additional
7information or certifications before making its decision.

8(e) Reporting and inspection.--An applicant or a recipient
9of financial assistance under the programs shall:

10(1) permit the authority to inspect its premises, books
11and records;

12(2) provide updated information to the authority if
13conditions change to the extent that the information
14originally given becomes inaccurate or misleading; and

15(3) provide the authority with any periodic financial
16reports and audits that the authority may require.

17(f) Employment projection audits.--The authority shall
18implement a procedure to determine whether the employment
19projections described in the application are achieved.

20(g) Transition.--The board shall have all power and
21authority necessary to implement a transition and continuation
22of consideration of pending applications and any other pending
23administrative actions under section 6 of the act of May 17, 
241956 (1955 P.L.1609, No.537), known as the Pennsylvania 
25Industrial Development Authority Act, that are submitted to the
26authority for consideration prior to the effective date of this
27section.

28§ 1122. Regulations.

29The board shall promulgate regulations necessary to
30administer the programs.

1§ 1123. Certification of economic development organizations.

2(a) General rule.--The authority shall establish guidelines
3for the certification of eligible nonprofit organizations as
4certified economic development organizations.

5(b) Eligible applicants.--The following nonprofit
6organizations may apply to be certified as a certified economic
7development organization:

8(1) A local development district organized and existing 
9under the act of act of December 7, 1994 (P.L.845, No.120), 
10known as the Local Development District Act.

11(2) An industrial development agency organized and 
12existing under the act of May 17, 1956 (1955 P.L.1609, 
13No.537), known as the Pennsylvania Industrial Development 
14Authority Act.

15(3) An industrial resource center organized and existing
16under the act of June 22, 2001 (P.L.400, No.31), known as the
17Industrial Resources Center Partnership Act.

18(4) A redevelopment authority organized and existing
19under the act of May 24, 1945 (P.L.982, No.383), known as the
20Redevelopment Cooperation Law.

21(5) A Community Development Financial Institution
22certified by the Community Development Financial Institution
23Fund established in section 104(a)(1) of the Riegle Community
24Development and Regulatory Improvement Act of 1994 (Public
25Law 103-325, 12 U.S.C. § 4703(a)(1)).

26(6) Any other nonprofit economic development
27organization determined by the authority as possessing the
28qualifications necessary to evaluate and administer the
29programs.

30(c) Requirements.--The guidelines must, at minimum, set

1requirements for annual training and professional development
2for an organization's professional staff, standards for the
3organization's facilities and technical capabilities, and
4require the organization to adopt a code of ethics.

5(d) Audit.--A certified economic development organization
6must submit an audit to the authority every three years
7demonstrating that requirements continue to be satisfied.

8(e) Approval.--If the authority determines that the
9application meets the requirements of the guidelines, the
10authority may, in its sole and final discretion, certify the
11applicant as a certified economic development organization.

12§ 1124. Transfer of funds.

13Except for funds in the Pollution Prevention Assistance
14Account, funds may be transferred by an action of the board
15between the Small Business First Fund, the Machinery and
16Equipment Loan Fund and the Industrial Development Fund to
17maximize the effectiveness of the programs.

18§ 1125. Conflict of interest.

19A member of the board or an employee of the authority may
20not, either directly or indirectly, be a party to or have any
21financial interest in any contract or agreement arising pursuant
22to this chapter or the programs.

23Subchapter D

24Transfer of loans

25Sec.

261130. Transfer of loans from certain programs.

27§ 1130. Transfer of loans from certain programs.

28(a) Loan transfer.--On the effective date of this section,
29outstanding loans executed under the Small Business First
30Program and the Machinery and Equipment Loan Program and

1approved loan commitments that have not been executed by the
2effective date of this section, including necessary
3documentation and collateral security associated with the loans,
4shall be transferred from the department to the authority.

5(b) Loan commitments.--An approved loan commitment
6transferred under subsection (a) shall be executed in accordance
7with 12 Pa.C.S. Chs. 23 (relating to small business first) and
829 (relating to machinery and equipment loans).

9(c) Legal actions.--On the effective date of this section,
10each legal action relating to a loan under the Small Business
11First Program or the Machinery and Equipment Loan Program shall
12be transferred to the authority.

13(d) Security or collateral.--No money deposited or to be
14deposited into the Small Business First Fund or the Machinery
15and Equipment Loan Fund may serve as security or collateral for
16any debt incurred by the board before the effective date of this
17section, unless proceeds made available by the debt are used by
18the board to fund loans or other financial assistance under the
19Small Business First Program or the Machinery and Equipment Loan
20Program to effectively carry out the purposes of the programs.

21Section 10. Repeals are as follows:

22(1) The General Assembly declares that the repeals under
23paragraph (2) are necessary to effectuate the addition of 12
24Pa.C.S. Ch. 30.

25(2) The following provisions of the act of May 17, 1956
26(1955 P.L.1609, No.537), known as the Pennsylvania Industrial
27Development Authority Act, are repealed:

28(i) The definition of "critical economic area" in
29section 3.

30(ii) Section 6.

1(iii) Section 7.

2(iv) Section 7.1.

3Section 11. The addition of 12 Pa.C.S. Ch. 30 is a
4continuation of sections 6, 7 and 7.1 of the act of May 17, 1956 
5(1955 P.L.1609, No.537), known as the Pennsylvania Industrial 
6Development Authority Act. Except as otherwise provided in 12
7Pa.C.S. Ch. 30, all activities initiated under sections 6, 7 and
87.1 of the Pennsylvania Industrial Development Authority Act
9shall continue and remain in full force and effect and may be
10completed under 12 Pa.C.S. Ch. 30. Orders, regulations, rules
11and decisions which were made under sections 6, 7 and 7.1 of the
12Pennsylvania Industrial Development Authority Act and which are
13in effect on the effective date of section 10(2)(ii), (iii) and
14(iv) of this act shall remain in full force and effect until
15revoked, vacated or modified under 12 Pa.C.S. Ch. 30. Contracts,
16obligations and collective bargaining agreements entered into
17under sections 6, 7 and 7.1 of the Pennsylvania Industrial 
18Development Authority Act are not affected nor impaired by the
19repeal of sections 6, 7 and 7.1 of the Pennsylvania Industrial 
20Development Authority Act.

21Section 12. This act shall take effect as follows:

22(1) The following shall take effect in 60 days:

23(i) The amendment of 12 Pa.C.S. § 302.

24(ii) The addition of Part IV heading immediately
25preceding Chapter 51 of Title 12.

26(iii) The repeal of Part IV heading of Title 12.

27(2) This section shall take effect immediately.

28(3) The remainder of this act shall take effect July 1,
292014, or immediately, whichever is later.