CAPITAL FACILITIES DEBT ENABLING ACT - BORROWING LIMITATIONS, BOND TERMS
                 AND CONDITIONS, CAPITAL DEBT FUND, ETC.
                  Act of Jul. 4, 2004, P.L. 516, No. 67               Cl. 72
                             Session of 2004
                               No. 2004-67

     HB 2472

                                  AN ACT

     Amending the act of February 9, 1999 (P.L.1, No.1), entitled "An
        act providing for borrowing for capital facilities;
        conferring powers and duties on various administrative
        agencies and officers; making appropriations; and making
        repeals," adding and amending definitions; and further
        providing for borrowing limitations, for bond terms and
        conditions, for the Capital Debt Fund, for registration of
        bonds, for appropriation for and limitation on redevelopment
        assistance capital projects and for funding and
        administration of redevelopment assistance capital projects.

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

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

     APPROVED--The 4th day of July, A. D. 2004.

     EDWARD G. RENDELL