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        PRIOR PRINTER'S NO. 1392                      PRINTER'S NO. 1459



No. 1026 Session of 2004

           ERICKSON, FEBRUARY 10, 2004

           MARCH 22, 2004

                                     AN ACT

     1  Amending Title 64 (Public Authorities and Quasi-Public
     2     Corporations) of the Pennsylvania Consolidated Statutes,
     3     providing for economic development financing AND FOR MONEY     <--

    10     The General Assembly of the Commonwealth of Pennsylvania
    11  hereby enacts as follows:
    12     Section 1.  Title 64 of the Pennsylvania Consolidated
    13  Statutes is amended by adding a part to read:
    14                              PART II
    16  Chapter
    17    11.  Pennsylvania Industrial Development Authority
    18         (Reserved)

     1    13.  Pennsylvania Economic Development Financing Authority
     2         (Reserved)
     3    15.  Pennsylvania Economic Development Authority
     4                             CHAPTER 11
     6                             (RESERVED)
     7                             CHAPTER 13
     9                             (RESERVED)
    10                             CHAPTER 15
    12  Subchapter
    13     A.  General Provisions
    14     B.  Structure and Powers
    15     C.  Bonds
    16     D.  Authority Loans
    17     E.  Programs
    18                            SUBCHAPTER A
    19                         GENERAL PROVISIONS
    20  Sec.
    21  1501.  Scope.
    22  1502.  Construction.
    23  1503.  Findings and declaration of policy.
    24  1504.  Definitions.
    25  § 1501.  Scope.
    26     This chapter relates to the Pennsylvania Economic Development
    27  Authority.
    28  § 1502.  Construction.
    29     This chapter shall be liberally construed in order to effect
    30  the legislative and public purposes of section 1503 (relating to
    20040S1026B1459                  - 2 -     

     1  findings and declaration of policy).
     2  § 1503.  Findings and declaration of policy.
     3     The General Assembly finds and declares as follows:
     4         (1)  Economic insecurity due to unemployment is at any
     5     time harmful to the health, safety, morals and general
     6     welfare of the people of this Commonwealth. A minimum level
     7     of unemployment and a maximum level of business opportunity
     8     and the elimination or prevention of blight can best be
     9     provided by the promotion, attraction, stimulation,
    10     rehabilitation and revitalization of industrial, commercial,
    11     tourism-related, production agriculture and other economic
    12     activities in this Commonwealth. The promotion of these
    13     activities will also enhance their competitiveness in the
    14     global economy.
    15         (2)  Many existing industrial, commercial and other
    16     economic activities throughout this Commonwealth could become
    17     more competitive and could expand more rapidly if additional
    18     means of financing were available for modern buildings, plant
    19     facilities, modern machinery and equipment and other capital
    20     needs. Additional activities could be attracted to this
    21     Commonwealth if additional means of financing were available
    22     to acquire, construct, rehabilitate and expand facilities.
    23     Financing for cost-savings activities related to buildings,
    24     plants, machinery and equipment and other facilities would
    25     further the purposes of this paragraph.
    26         (3)  It is the policy of the Commonwealth to promote the
    27     health, safety, employment, business opportunities, economic
    28     activity and general welfare of the people by establishing an
    29     authority to assist in financing economic development.
    30  § 1504.  Definitions.
    20040S1026B1459                  - 3 -     

     1     The following words and phrases when used in this chapter
     2  shall have the meaning given to them in this section unless the
     3  context clearly indicates otherwise:
     4     "Authority."  The Pennsylvania Economic Development Authority
     5  established in section 1511 (relating to authority).
     6     "Board."  The board of the authority continued by section
     7  1512 (relating to board).
     8     "Department."  The Department of Community and Economic
     9  Development of the Commonwealth.
    10     "Project."  Any industrial facility, commercial facility,
    11  pollution control facility, energy conversion facility, energy-
    12  producing facility, disaster relief project facility, public
    13  facility and other facility or activity which promotes any of
    14  the public purposes set forth in section 1503 (relating to
    15  findings and declaration of policy). A project may consist
    16  solely of the financing of operating expenses. The term
    17  includes:
    18         (1)  Land, interests in land, easements, appurtenances,
    19     improvements, buildings, structures, equipment and
    20     furnishings.
    21         (2)  Other real or personal property, tangible or
    22     intangible or interest in real or personal property, alone or
    23     in combination.
    24         (3)  Working capital and other capital needs for
    25     industrial, commercial and other economic or cost savings
    26     activities.
    27                            SUBCHAPTER B
    28                        STRUCTURE AND POWERS
    29  Sec.
    30  1511.  Authority.
    20040S1026B1459                  - 4 -     

     1  1512.  Board.
     2  1513.  Powers.
     3  § 1511.  Authority.
     4     (a)  Establishment.--The Pennsylvania Economic Development
     5  Authority is established. The authority shall be an
     6  instrumentality of the Commonwealth and a body corporate and
     7  politic, with corporate succession.
     8     (b)  Governance.--The authority shall be governed and the
     9  powers of the authority shall be exercised by the board.
    10     (c)  Revenue.--Expenses of the authority shall be paid from
    11  assets or income of the authority. Except as provided in this
    12  chapter or by other law, the Commonwealth shall not be
    13  responsible for funding the expenses of the authority.
    14     (d)  Fiscal year.--The fiscal year of the authority shall be
    15  the same as the fiscal year of the Commonwealth.
    16     (e)  Funds of authority.--The authority may create funds and
    17  accounts necessary or desirable for its corporate purposes. No
    18  other provision of this chapter shall be construed to prohibit
    19  the authority from creating within any fund one or more accounts
    20  which may be used or pledged by the authority for a special
    21  purpose.
    22     (f)  Audit.--The accounts and books of the authority shall be
    23  examined and audited annually by a recognized independent
    24  certified public accounting firm.
    25     (g)  General Assembly review.--
    26         (1)  The Appropriations Committee of the Senate and the
    27     Appropriations Committee of the House of Representatives have
    28     the right to examine the books, accounts and records of the
    29     authority.
    30         (2)  The authority shall annually file a copy of the
    20040S1026B1459                  - 5 -     

     1     audit required by subsection (f) with the Appropriations
     2     Committee of the Senate and the Appropriations Committee of
     3     the House of Representatives.
     4     (h)  Publication.--The authority shall annually publish a
     5  concise financial statement in the Pennsylvania Bulletin.
     6     (i)  Cooperation.--Executive agencies shall cooperate with
     7  and provide assistance to the authority without financial
     8  reimbursement.
     9     (j)  Dissolution.--The authority may be dissolved by law if
    10  all outstanding liabilities of the authority, including bonds
    11  and other contractual obligations, have been fully paid,
    12  retired, satisfied or discharged, or provision has been made for
    13  payment of all outstanding liabilities of the authority,
    14  including bonds and other contractual obligations. Upon the
    15  dissolution of the authority, all funds, assets and other
    16  property of the authority shall vest in the Commonwealth.
    17     (k)  Applicability.--The following acts shall apply to the
    18  board:
    19         (1)  The act of June 21, 1957 (P.L.390, No.212), referred
    20     to as the Right-to-Know Law.
    21         (2)  The act of July 19, 1957 (P.L.1017, No.451), known
    22     as the State Adverse Interest Act.
    23         (3)  The provisions of 65 Pa.C.S. Chs. 7 (relating to
    24     open meetings) and 11 (relating to ethics standards and
    25     financial disclosure).
    26  § 1512.  Board.
    27     (a)  Composition.--The board of the authority shall be
    28  composed of the following members:
    29         (1)  The Secretary of Community and Economic Development.
    30         (2)  The Secretary of the Budget.
    20040S1026B1459                  - 6 -     

     1         (3)  The Secretary of Banking.
     2         (4)  Four legislative appointees.
     3             (i)  Appointments are as follows:
     4                 (A)  One individual appointed by the President
     5             pro tempore of the Senate.
     6                 (B)  One individual appointed by the Minority
     7             Leader of the Senate.
     8                 (C)  One individual appointed by the Speaker of
     9             the House of Representatives.
    10                 (D)  One individual appointed by the Minority
    11             Leader of the House of Representatives.
    12             (ii)  A legislative appointee under this paragraph     <--
    13         may appoint a designee.
    14             (iii) (II)  Legislative appointees shall serve at the  <--
    15         pleasure of the appointing authority.
    16     (b)  Organization.--The Governor shall select a member of the
    17  board to serve as chairperson. The members shall select from
    18  among themselves such officers as they shall determine.
    19     (c)  Meetings.--The board shall meet at the call of the
    20  chairperson but shall meet at least once each month.
    21     (d)  Quorum.--A majority SIX MEMBERS of the board shall        <--
    22  constitute a quorum. The consent of at least five SIX members of  <--
    23  the board shall be necessary to take any action on behalf of the
    24  authority.
    25     (e)  Compensation.--The members of the board shall be
    26  entitled to no compensation for their services as members but
    27  shall be entitled to reimbursement for all necessary expenses
    28  incurred in connection with the performance of their duties as
    29  members.
    30     (f)  Liability.--Members of the board shall not be liable
    20040S1026B1459                  - 7 -     

     1  personally on any obligations of the authority, including bonds
     2  of the authority.
     3  § 1513.  Powers.
     4     (a)  Powers.--The authority, as a public corporation and
     5  governmental instrumentality exercising public powers of the
     6  Commonwealth, has the following powers:
     7         (1)  To have existence until its existence is terminated
     8     by law.
     9         (2)  To adopt bylaws and guidelines as necessary.
    10         (3)  To sue and be sued, implead and be impleaded,
    11     interplead, complain and defend in any court.
    12         (4)  To adopt, use and alter a corporate seal.
    13         (5)  To employ an executive director and other persons as
    14     are necessary or convenient for carrying on the business of
    15     the authority.
    16         (6)  To retain attorneys, accountants, auditors and
    17     financial experts, to render services and engage the services
    18     of other advisors, consultants and agents as necessary. The
    19     chairman shall ensure that minority-owned or minority-
    20     controlled firms have an opportunity to participate to a
    21     significant degree in the provision of contractual services
    22     purchased by the authority.
    23         (7)  To pay or satisfy obligations of the authority.
    24         (8)  To contract and execute instruments, including
    25     financing agreements, letters of credit, guarantees,
    26     sureties, mortgages, loans, standby loan commitments and
    27     contracts of insurance, which are necessary or appropriate
    28     for carrying on the business of the authority. This power
    29     includes the ability to make and execute contracts for the
    30     servicing of loans and mortgages acquired by the authority.
    20040S1026B1459                  - 8 -     

     1         (9)  To borrow money, issue bonds, obtain lines and
     2     letters of credit and incur debt.
     3         (10)  To pledge the credit of the authority and provide
     4     security and liquidity to obligees of the authority as the
     5     authority deems necessary or appropriate.
     6         (11)  To negotiate modifications or alterations in
     7     mortgages or security interests.
     8         (12)  To foreclose on a mortgage or security interest in
     9     default.
    10         (13)  To commence any action necessary to protect or
    11     enforce any right conferred upon the authority by any law,
    12     mortgage, security agreement, contract or other agreement.
    13         (14)  To bid for or purchase property which was the
    14     subject of a mortgage or security interest at a foreclosure
    15     or other sale and to acquire and take possession of that
    16     property.
    17         (15)  To charge and collect fees and charges in
    18     connection with loan commitments and servicing, including
    19     reimbursement of costs of financing.
    20         (16)  To acquire, accept, purchase, receive, collect,
    21     hold, convey and invest funds, fees and property, whether
    22     tangible or intangible, from all sources, directly or by
    23     assignment, pledge or otherwise.
    24         (17)  To sell, transfer, convey and dispose of any
    25     property, whether tangible or intangible.
    26         (18)  To acquire and sell loans, mortgages and security
    27     interests at public or private sale.
    28         (19)  To provide financial assistance to applicants and
    29     project users.
    30         (20)  To agree to and comply with any conditions attached
    20040S1026B1459                  - 9 -     

     1     to Federal or Commonwealth financial assistance not
     2     inconsistent with the provisions of this chapter.
     3         (21)  To make rules regarding the operation of properties
     4     and facilities of the authority subject to agreements with
     5     obligees of the authority.
     6         (22)  To develop contractually binding policies to assure
     7     that:
     8             (i)  all persons, including the authority's
     9         contractors, subcontractors, assignees, lessees, agents,
    10         vendors and suppliers, are accorded equality of
    11         opportunity in employment and contracting associated with
    12         projects and programs authorized under this chapter; and
    13             (ii)  contracting parties demonstrate diversity in
    14         ownership of equity interests.
    15         (23)  To exercise rights provided by law for the benefit
    16     or protection of the authority or obligees of the authority.
    17         (24)  To invest money of the authority not required for
    18     immediate use, including proceeds from the sale of any bonds,
    19     as the board determines, subject to any agreement with
    20     bondholders stated in the authorizing resolution providing
    21     for the issuance of bonds.
    22         (25)  To procure insurance against any loss in connection
    23     with its programs, property and other assets.
    24         (26)  To enter into agreements providing for the
    25     acquisition of projects comprising or including public
    26     facilities for financing purposes only.
    27         (27)  To promulgate regulations containing restrictions
    28     as it may deem necessary or appropriate to effectuate the
    29     public purposes of this chapter.
    30         (28)  To finance all or part of an interagency project
    20040S1026B1459                 - 10 -     

     1     which meets the requirements of section 1521(a)(2) (relating
     2     to bond issuance).
     3         (29)  To negotiate and enter into interest rate exchange
     4     agreements, interest rate cap agreements, collar agreements,
     5     corridor agreements, ceiling agreements, floor agreements,
     6     forward agreements, float agreements and other similar
     7     arrangements, which, in the judgment of the authority, will
     8     assist the authority in managing the interest costs of the
     9     authority.
    10         (30)  To enter into financing agreements with applicants
    11     and project users providing, among other things:
    12             (i)  for loan, lease or sale financing or other
    13         financing of projects for applicants or project users;
    14             (ii)  for loan, rental or purchase price payments or
    15         other payments, sufficient to amortize the principal,
    16         interest and premium, if any, of all bonds and
    17         contractual obligations of the authority incurred to
    18         provide funds to pay the costs of the projects to be
    19         financed;
    20             (iii)  for the applicants or project users to pay or
    21         cause to be paid all other costs of acquiring,
    22         constructing, maintaining and operating the projects;
    23             (iv)  for conveyance with or without consideration of
    24         any part or all of a project to the project user or
    25         applicant on or before payment of all bonds and
    26         contractual obligations of the authority incurred with
    27         respect to the project; and
    28             (v)  for other matters as are customary in those
    29         agreements or as may be deemed necessary or appropriate
    30         by the authority.
    20040S1026B1459                 - 11 -     

     1         (31)  To make contracts and to execute instruments
     2     necessary or convenient for the carrying on of its business.
     3         (32)  To do any act necessary or appropriate to carry out
     4     and effectuate the purposes of this chapter.
     5         (33)  To do any act necessary or convenient to the
     6     exercise of the powers set forth in this subsection
     7     reasonably implied from those powers.
     8     (b)  Duties.--The authority shall administer the programs
     9  established in Subchapter E (relating to programs) in accordance
    10  with this chapter.
    11                            SUBCHAPTER C
    12                               BONDS
    13  Sec.
    14  1521.  Bond issuance.
    15  1522.  Commonwealth taxation.
    16  1523.  Federal taxation.
    17  1524.  Validity of bonds; limitation on actions.
    18  1525.  Provisions of bonds; trust agreements.
    19  1526.  Validity of pledge.
    20  1527.  Commonwealth pledges.
    21  1528.  Bonds to be legal investments.
    22  1529.  Bondholder rights.
    23  § 1521.  Bond issuance.
    24     (a)  Authorization.--
    25         (1)  The authority has the power to issue its limited
    26     obligation revenue bonds and other types of limited
    27     obligation revenue financing as in the judgment of the
    28     authority is necessary to provide sufficient funds for any
    29     project or group of projects, provided as follows:
    30             (i)  That the issuance by the authority of taxable or
    20040S1026B1459                 - 12 -     

     1         tax-exempt bonds on behalf of projects comprising
     2         industrial facilities, commercial facilities, pollution
     3         control facilities, energy conversion facilities, energy-
     4         producing facilities and disaster relief project
     5         facilities, other than Pennsylvania Opportunity Fund
     6         projects, has been authorized by a local economic
     7         development financing authority or a group of local
     8         economic development financing authorities or by a local
     9         economic development agency or a group of local economic
    10         development agencies.
    11             (ii)  That the authority may issue taxable or tax-
    12         exempt bonds on behalf of interagency projects, only if:
    13                 (A)  the applicant has first applied to PENNVEST
    14             for financing under the provisions of the act of
    15             March 1, 1988 (P.L.82, No.16), known as the
    16             Pennsylvania Infrastructure Investment Authority Act;
    17             and
    18                 (B)  PENNVEST, in writing, refers the applicant
    19             to the authority to finance all or part of the
    20             interagency project in accordance with this chapter.
    21             (iii)  That the issuance by the authority of taxable
    22         or tax-exempt bonds for a public facility, for
    23         interagency projects and for projects for roads and
    24         transportation facilities and transportation systems has
    25         been authorized by a municipality, municipal authority or
    26         Commonwealth agency and that both the applicant and the
    27         authority have determined that the cost of obtaining the
    28         financing for the public facility will be reduced through
    29         the issuance of bonds through the authority. For purposes
    30         of the determination required in this subparagraph, any
    20040S1026B1459                 - 13 -     

     1         financing for a public facility that the authority
     2         reasonably believes could have received a rating of "A"
     3         or better from a nationally recognized rating agency
     4         shall be presumed not to be eligible for financing by the
     5         authority under this paragraph.
     6         (2)  The authority may, as it deems necessary and
     7     desirable, use the proceeds of bonds issued for all of the
     8     following:
     9             (i)  Making loans.
    10             (ii)  Purchasing loans, mortgages, security interests
    11         or loan participations.
    12             (iii)  Paying incidental expenses in connection with
    13         activity under subparagraphs (i) and (ii).
    14             (iv)  Paying expenses of authorizing and issuing the
    15         bonds.
    16             (v)  Paying interest on the bonds until revenues of
    17         the project are available in sufficient amounts to pay
    18         interest.
    19             (vi)  Funding reserves.
    20     (b)  Method of financing.--The financing of projects may be
    21  with tax-exempt bonds or taxable bonds issued pursuant to this
    22  chapter and may be direct through application of bond proceeds
    23  or other funds to pay project costs or indirect through stock
    24  purchases or other means as the authority approves.
    25     (c)  Authorization requirements.--
    26         (1)  Bonds of the authority shall be authorized by a
    27     resolution of the board.
    28         (2)  The bonds shall, as provided in the resolution of
    29     the board:
    30             (i)  be of a series;
    20040S1026B1459                 - 14 -     

     1             (ii)  bear a date or dates;
     2             (iii)  bear or accrue interest at any rate or rates,
     3         whether fixed or variable;
     4             (iv)  be in denominations;
     5             (v)  be in any form, either coupon or fully
     6         registered without coupons or in certificated or book-
     7         entry-only form;
     8             (vi)  carry registration, exchangeability and
     9         interchangeability privileges;
    10             (vii)  be payable in any medium of payment and at any
    11         place or places;
    12             (viii)  mature on a date or dates not to exceed 40
    13         years from the bonds' original issue date; and
    14             (ix)  be subject to terms of redemption, if any.
    15         (3)  Bonds shall be signed by or shall bear the facsimile
    16     signature of the officer designated by the board.
    17         (4)  Interest coupons shall be attached to coupon bonds
    18     and shall bear the facsimile signature of the officer
    19     designated by the board.
    20         (5)  Bonds may be authenticated by an authenticating
    21     agent, fiscal agent or trustee.
    22         (6)  Bonds may be issued and delivered notwithstanding
    23     that the officer signing the bonds or whose facsimile
    24     signature is on a coupon has ceased to be the officer at the
    25     time when the bond is actually delivered.
    26     (d)  No debt or liability of the Commonwealth.--
    27         (1)  Bonds issued under this chapter shall not be a debt
    28     or liability of the Commonwealth and shall not create or
    29     constitute any indebtedness, liability or obligation of the
    30     Commonwealth.
    20040S1026B1459                 - 15 -     

     1         (2)  Bonds shall be payable solely from revenues or funds
     2     pledged or available for their repayment as authorized in
     3     this chapter, including the proceeds of any issue of bonds
     4     and, in the case of a public project, the pledge of fees,
     5     taxes and other revenues by a political subdivision or other
     6     instrumentality of the Commonwealth.
     7         (3)  All bonds shall contain on their faces statements to
     8     the effect that:
     9             (i)  the authority is obligated to pay the principal
    10         of or the interest on the bonds only from its revenues,
    11         receipts or funds pledged or available for their payment
    12         as authorized in this chapter;
    13             (ii)  neither the Commonwealth nor any political
    14         subdivision is obligated to pay the principal or
    15         interest; and
    16             (iii)  neither the faith and credit nor the taxing
    17         power of the Commonwealth or any political subdivision is
    18         pledged to the payment of the principal of or the
    19         interest on the bonds.
    20     (e)  Sale.--
    21         (1)  Bonds may be sold at public sale, invited sale or
    22     private sale for the price or prices the authority
    23     determines.
    24         (2)  The authority shall ensure that minority-owned or
    25     minority-controlled firms have an opportunity to participate
    26     in a significant way in bond sale activities.
    27     (f)  Interim receipts.--Pending the preparation of the
    28  definitive bonds, interim receipts may be issued to the
    29  purchaser or purchasers of the bonds and shall contain the terms
    30  and conditions established by the authority.
    20040S1026B1459                 - 16 -     

     1     (g)  Negotiable instruments.--Bonds of the authority shall
     2  have the qualities of negotiable instruments under 13 Pa.C.S.
     3  (relating to commercial code).
     4     (h)  Refunding.--Subject to provisions of this chapter and
     5  the terms of bonds or other contractual obligations issued in
     6  accordance with this chapter, the authority may refund any
     7  outstanding debt of the authority, whether the debt represents
     8  principal or interest, in whole or in part, at any time. For the
     9  purposes of this subsection, the term "refund" and its
    10  variations means the issuance and sale of obligations the
    11  proceeds of which are used or are to be used for the payment or
    12  redemption of outstanding obligations upon or prior to maturity.
    13  § 1522.  Commonwealth taxation.
    14     (a)  General.--The effectuation of the purposes of the
    15  authority is in all respects for the benefit of the people of
    16  this Commonwealth; for the increase of their commerce and
    17  prosperity; and for the improvement of their health, safety,
    18  welfare and living conditions.
    19     (b)  Authority.--Since the authority, as a public
    20  instrumentality of the Commonwealth, will be performing
    21  essential governmental functions in effectuating these purposes,
    22  the authority is not required to pay any taxes or assessments
    23  upon any property acquired or used or permitted to be used by
    24  the authority for its purposes.
    25     (c)  Bonds.--Bonds issued by the authority, the transfer and
    26  the income from the bonds, including profit made on their sale,
    27  are free from State and local taxation within this Commonwealth.
    28  The exclusion under this subsection shall not extend to gift,
    29  estate, succession or inheritance taxes or any other taxes not
    30  levied directly on the bonds, their transfer, the income from
    20040S1026B1459                 - 17 -     

     1  the bonds or the realization of profits on their sale.
     2  § 1523.  Federal taxation.
     3     (a)  Allocation.--If the bonds issued by the authority for a
     4  project are tax-exempt bonds for which Federal law requires an
     5  allocation, the department shall issue an allocation charging a
     6  small issue project's pro rata share of the issue to the county
     7  in which the project will be located if the project requires a
     8  type of allocation distributed by the department to counties.
     9     (b)  Approval.--If gubernatorial approval is required by
    10  Federal or Commonwealth law, the Governor may approve the
    11  issuance of bonds by the authority upon receipt of written
    12  request for approval from the board. The written request must
    13  state all of the following:
    14         (1)  The authority has conducted a public hearing, with
    15     appropriate public notice, concerning the purposes for which
    16     the bonds are to be issued.
    17         (2)  A description of the project or projects to be
    18     financed.
    19         (3)  A description of the method of financing the project
    20     or projects.
    21         (4)  A summary of the comments made and questions posed
    22     at the public hearing.
    23  § 1524.  Validity of bonds; limitation on actions.
    24     (a)  Presumption.--A bond reciting in substance that it has
    25  been issued by the authority to accomplish the public purposes
    26  of this chapter shall be conclusively deemed in any suit, action
    27  or proceeding involving the validity or enforceability of the
    28  bonds or their security to have been issued for the public
    29  purposes of this chapter.
    30     (b)  Estoppel.--After issuance, bonds shall be conclusively
    20040S1026B1459                 - 18 -     

     1  presumed to be fully authorized and issued by all the laws of
     2  this Commonwealth; and any person shall be estopped from
     3  questioning their validity, sale, execution or delivery by the
     4  authority.
     5  § 1525.  Provisions of bonds; trust agreements.
     6     A resolution authorizing bonds or any trust agreement
     7  approved by the authority in a resolution authorizing the bonds
     8  may contain provisions to:
     9         (1)  Secure the bonds.
    10         (2)  Covenant against:
    11             (i)  pledging or granting a security interest in all
    12         or any part of the authority's revenues or all or any
    13         part of its property to which its right or title exists
    14         or which may later come into existence; or
    15             (ii)  permitting or suffering any lien on all or any
    16         part of its revenues or property.
    17         (3)  Covenant with respect to limiting the authority's
    18     right to sell, pledge or otherwise dispose of bonds or notes
    19     of governmental units, loan agreements or other property.
    20         (4)  Covenant as to additional bonds to be issued, as to
    21     limitations on additional bonds, as to terms and conditions
    22     of additional bonds and as to the custody, application,
    23     investment and disposition of proceeds of bonds.
    24         (5)  Covenant as to the incurring of other debts or
    25     obligations by the authority.
    26         (6)  Covenant as to the:
    27             (i)  payment of principal of or interest on bonds;
    28             (ii)  sources and methods of payment; and
    29             (iii)  rank or priority of bonds with respect to
    30         liens or security interests.
    20040S1026B1459                 - 19 -     

     1         (7)  Provide for the replacement of lost, stolen,
     2     destroyed or mutilated bonds.
     3         (8)  Covenant against extending the time for the payment
     4     of bonds or interest.
     5         (9)  Covenant as to the redemption, purchase, tender of
     6     bonds by the authority or the bondholders and the privilege
     7     of exchange of bonds for other bonds.
     8         (10)  Create or authorize the creation of special funds
     9     or accounts to be held in trust or otherwise for the benefit
    10     of bondholders or of reserves for debt service or other
    11     purposes.
    12         (11)  Covenant as to the use, investment and disposition
    13     of the money held in special funds, accounts or reserves.
    14         (12)  Prescribe:
    15             (i)  the procedure, if any, by which the terms of any
    16         contract with bondholders may be amended or abrogated;
    17             (ii)  the percentage of the principal amount of bonds
    18         the holders of which must consent to the amendment or
    19         abrogation; and
    20             (iii)  the manner in which the consent may be given.
    21         (13)  Covenant as to the use of any or all of the
    22     authority's real or personal property or warrant its title.
    23         (14)  Provide for the maintenance of the authority's real
    24     and personal property, the replacement of its real and
    25     personal property, the insurance to be carried on its real
    26     and personal property and the use and disposition of
    27     insurance proceeds.
    28         (15)  Provide for rights, liabilities, powers and duties
    29     arising upon the breach of any covenant, condition or
    30     obligation.
    20040S1026B1459                 - 20 -     

     1         (16)  Prescribe:
     2             (i)  events of default;
     3             (ii)  terms and conditions upon which any or all of
     4         the bonds become or may be declared due and payable
     5         before stated maturity following an event of default; and
     6             (iii)  terms and conditions upon which the
     7         declaration and its consequence may be waived.
     8         (17)  Pay the costs or expenses incident to:
     9             (i)  the enforcement of the bonds;
    10             (ii)  the provisions of the resolution authorizing
    11         the issuance of the bonds;
    12             (iii)  the trust agreement securing the bonds; and
    13             (iv)  any covenant or agreement of the authority with
    14         the holders of the bonds or other obligees of the
    15         authority.
    16         (18)  Vest in a trustee, within or without this
    17     Commonwealth, any property, rights, powers and duties in
    18     trust, including rights with respect to the sale or other
    19     disposition of notes and bonds of governmental units and
    20     other instruments and security pledged under a resolution or
    21     trust agreement for the benefit of bondholders and rights, by
    22     suit or action, to foreclose a mortgage pledged under a
    23     resolution or trust indenture for the benefit of bondholders.
    24         (19)  Limit the rights, powers and duties of a trustee
    25     and the right of bondholders to appoint a trustee.
    26         (20)  Establish the terms and conditions upon which a
    27     trustee or the bondholders may enforce a covenant or rights
    28     securing or relating to the bonds.
    29         (21)  Obtain letters of credit, bond insurance and other
    30     facilities for credit enhancement and liquidity.
    20040S1026B1459                 - 21 -     

     1         (22)  Exercise all or any part or combination of the
     2     powers granted in this chapter.
     3         (23)  Make covenants other than and in addition to the
     4     covenants expressly authorized by this chapter.
     5         (24)  Make any other covenant and do or refrain from
     6     doing any other act and thing necessary, convenient or
     7     desirable in order to better secure the bonds of the
     8     authority or, in the absolute discretion of the authority, as
     9     will tend to make bonds of the authority more marketable,
    10     notwithstanding that the covenant, act or thing may not be
    11     specifically enumerated in this chapter.
    12  § 1526.  Validity of pledge.
    13     Any pledge of or grant of a security interest in revenues or
    14  instruments made by the authority shall be valid and binding
    15  from the time when the pledge is made. The revenues, receipts,
    16  money, funds or other property or instruments pledged and later
    17  received by the authority shall immediately be subject to the
    18  lien of the pledge or security interest without any physical
    19  delivery of the property pledged or further act. The lien of the
    20  pledge or security interest shall be valid and binding as
    21  against all parties having claims of any kind in tort, contract
    22  or otherwise against the authority irrespective of whether the
    23  parties have notice of the lien, pledge or security interest. No
    24  instrument by which a pledge or security interest is created,
    25  evidenced or noticed need be recorded or filed to perfect the
    26  pledge or security interest, except in the records of the
    27  authority.
    28  § 1527.  Commonwealth pledges.
    29     (a)  Bondholders.--The Commonwealth pledges to and agrees
    30  with each obligee of the authority that the Commonwealth will
    20040S1026B1459                 - 22 -     

     1  not limit or alter the rights and powers vested in the authority
     2  or otherwise created by this chapter in any manner inconsistent
     3  with the obligations of the authority to its obligees until all
     4  bonds at any time issued, together with the interest on the
     5  bonds, are fully paid and discharged.
     6     (b)  Lessees.--The Commonwealth pledges and agrees with any
     7  person that, as owner of property which is leased or subleased
     8  to or from the authority, it will not limit or alter the rights
     9  and powers vested in the authority or otherwise created by this
    10  chapter in any manner which impairs the obligations of the
    11  authority until all the obligations of the authority under the
    12  lease or sublease are fully met and discharged.
    13  § 1528.  Bonds to be legal investments.
    14     (a)  Investments.--Bonds issued pursuant to this chapter are
    15  made securities in which all of the following may properly and
    16  legally invest funds, including capital, deposits or other funds
    17  in their control or belonging to them:
    18         (1)  Government agencies.
    19         (2)  Insurance companies.
    20         (3)  Trust companies.
    21         (4)  Banking associations, banking corporations and
    22     savings banks.
    23         (5)  Investment companies.
    24         (6)  Executors, trustees and other fiduciaries.
    25         (7)  Trustees of any retirement, pension or annuity fund
    26     or system of the Commonwealth.
    27     (b)  Deposits.--Bonds issued by the authority are made
    28  securities which may properly and legally be deposited with and
    29  received by any government agency for any purpose for which the
    30  deposit of bonds or other obligations of the Commonwealth are
    20040S1026B1459                 - 23 -     

     1  authorized by law.
     2  § 1529.  Bondholder rights.
     3     The rights and remedies conferred upon or granted to
     4  bondholders pursuant to this chapter shall be in addition to and
     5  not in limitation of rights and remedies lawfully granted to
     6  bondholders by the resolution providing for the issuance of
     7  bonds or by any trust agreement or other agreement under which
     8  the bonds may be issued or secured.
     9                            SUBCHAPTER D
    10                          AUTHORITY LOANS
    11  Sec.
    12  1541.  Restrictions on use of funds.
    13  1542.  Funding.
    14  § 1541.  Restrictions on use of funds.
    15     In addition to other provisions of this chapter limiting the
    16  power of the authority to make loans or provide other financial
    17  assistance to a particular project, no funds of the authority
    18  shall be used with respect to a project if the authority would
    19  be required, except upon foreclosure or except upon the
    20  occurrence of a default in the payment or terms of any loan
    21  made, to operate, service or maintain the project pursuant to
    22  any lease or other agreement. Nothing shall prevent the
    23  authority from transferring the property to the applicant,
    24  project user or either of their designees at the end of the term
    25  of the financing.
    26  § 1542.  Funding.
    27     The following shall apply:
    28         (1)  The authority is authorized to incur debt, including
    29     through the issuance of bonds, in an amount not to exceed
    30     $150,000,000 which shall be deposited into an account to fund
    20040S1026B1459                 - 24 -     

     1     all of the following:
     2             (i)  Programs established by Subchapter F (relating
     3         to programs).
     4             (ii)  The costs of the authority, the board and the
     5         department which are incurred in connection with the
     6         administration of the program.
     7             (iii)  For use by the board for the making of new
     8         grants and the making of new and additional loans and
     9         loan guarantees under section 1551 (relating to First
    10         Industries).
    11         (2)  Deposits of funds made into the First Industries
    12     Program Account, including funds paid as a result of the
    13     payment of interest and principal on loans made under this
    14     program and interest earned on the funds in the account,
    15     shall be a revolving loan fund, for payment of interest on or
    16     repayment of the debt incurred by the authority as authorized
    17     in this chapter and for costs associated with the
    18     administration of the program, as the board shall determine.
    19                            SUBCHAPTER E
    20                              PROGRAMS
    21  Sec.
    22  1551.  First Industries.
    23  § 1551.  First Industries.
    24     (a)  Establishment.--There is established a program to be
    25  known as the First Industries Program. The program shall provide
    26  financial assistance in the form of loans, grants and guarantees
    27  for tourism, agricultural and related projects located within
    28  this Commonwealth.
    29     (b)  Applications for planning grants.--A project applicant
    30  may submit an application to the board requesting a planning
    20040S1026B1459                 - 25 -     

     1  grant in an amount not to exceed $250,000 for the reimbursement
     2  of costs of predevelopment and feasibility studies for a tourism
     3  or agricultural project. The application shall be on the form
     4  required by the board and shall include or demonstrate all of
     5  the following:
     6         (1)  The applicant's name and address.
     7         (2)  The location of the project.
     8         (3)  A description of the project.
     9         (4)  An estimate of the cost of the predevelopment and
    10     feasibility studies and the goal to be achieved by carrying
    11     out the proposed studies.
    12         (5)  A statement of the amount of the planning grant
    13     sought.
    14         (6)  Any other information required by the board.
    15     (c)  Review and approval of planning grant applications.--The
    16  following shall apply:
    17         (1)  The board shall review the application and upon
    18     being satisfied that all requirements have been met, the
    19     board may approve the application and award a planning grant.
    20     To be eligible for funding, a project must demonstrate one or
    21     more of the following:
    22             (i)  The project involves a joint venture among two
    23         or more tourism, agricultural or related entities that
    24         will have a demonstrable impact on the economy of the
    25         community or region where the venture will be located or
    26         operational.
    27             (ii)  The project will promote research and
    28         development efforts leading to increased
    29         commercialization or utilization of farm commodities.
    30             (iii)  The project will result in environmentally
    20040S1026B1459                 - 26 -     

     1         friendly or energy efficient agricultural operations.
     2             (iv)  The project will result in more cost-effective
     3         and efficient marketing of regional tourism or
     4         agricultural assets.
     5             (v)  The project will result in a substantial
     6         increase in revenues for the Commonwealth or the host
     7         municipality.
     8             (vi)  The project proposes to utilize Commonwealth-
     9         owned natural resources for public/private development of
    10         a tourism product.
    11         (2)  Copies of all reports and studies prepared with
    12     planning grant funds shall be provided to the board and shall
    13     be made available to any person upon request.
    14     (d)  Project financing.--The board may make funds available
    15  to project applicants to finance the cost of a project. The
    16  funds may be provided in the form of direct loans to project
    17  applicants, loans to capitalize revolving loan funds operated by
    18  nonprofit entities or guarantees of loans made by commercial
    19  lending institutions. The board shall determine the amount of
    20  funds provided under section 1542 (relating to funding) to be
    21  allocated among the different methods of financing authorized in
    22  subsections (e), (f) and (g), subject to the provisions of
    23  subsection (h).
    24     (e)  Direct loans to project applicants.--The board may make
    25  funds available to the department for loans for production
    26  agriculture and tourism activities under the Small Business
    27  First program or the Machinery and Equipment Loan Fund program
    28  or any successor programs, as authorized under the act of June
    29  29, 1996 (P.L.434, No.67), known as the Job Enhancement Act.
    30  Loans shall be made in accordance with the terms and conditions
    20040S1026B1459                 - 27 -     

     1  of those programs and may be made to any type of tourism,
     2  production agriculture or related project that would be eligible
     3  for financing under this chapter. After the department has
     4  completed its review of the application and has determined that
     5  the application should be recommended for approval, it shall
     6  submit the application and its recommendation to the board for
     7  approval and funding. Loans shall be administered by the
     8  department, but all payments of loan principal and interest
     9  shall be paid into an account.
    10     (f)  Applications for loans to local revolving loan funds.--
    11  The following shall apply:
    12         (1)  A nonprofit entity that operates a revolving loan
    13     fund may submit an application to the board requesting a loan
    14     to capitalize a revolving loan fund administered by the
    15     nonprofit entity. The application shall be on the form
    16     required by the board and shall include or demonstrate all of
    17     the following:
    18             (i)  The applicant's name and address.
    19             (ii)  The names of the applicant's executive
    20         director, board of directors and all staff involved with
    21         the operation and administration of the revolving loan
    22         fund.
    23             (iii)  A copy of the applicant's last two years of
    24         certified public accountant-prepared financial
    25         statements.
    26             (iv)  A statement that the applicant will utilize the
    27         funds received only for tourism and production
    28         agriculture projects and a description of how the
    29         revolving loan fund will accept, review, approve and
    30         administer applications for funding.
    20040S1026B1459                 - 28 -     

     1             (v)  The collateral or security to be provided for
     2         the loan.
     3             (vi)  Identification of any matching funds for the
     4         project.
     5             (vii)  Any other information required by the board.
     6         (2)  The board shall review applications submitted under
     7     paragraph (1) to determine all of the following:
     8             (i)  If the local revolving loan fund is financially
     9         sound. If the applicant is an accredited community
    10         development financial institution as determined by the
    11         Pennsylvania Community Development Bank Operational
    12         Committee, as authorized under the Job Enhancement Act,
    13         the board may accept that determination in lieu of
    14         conducting its own review of the financial soundness of
    15         the fund.
    16             (ii)  If the proposed collateral or security is
    17         sufficient to repay the loan or is offered in accordance
    18         with the same terms and conditions provided to all other
    19         lenders of capital for the revolving loan fund.
    20             (iii)  If the funds will be used to make loans to
    21         tourism or production agriculture projects.
    22             (iv)  If the applicant complied with all other
    23         criteria established by the board.
    24         (3)  Upon being satisfied that all requirements have been
    25     met, the board may approve the application and award a loan
    26     to the project for a term and at an interest rate to be
    27     established by the board.
    28     (g)  Applications for loan guarantees.--The following shall
    29  apply:
    30         (1)  A project applicant, which may include a commercial
    20040S1026B1459                 - 29 -     

     1     lending institution on behalf of a borrower, may request a
     2     loan guarantee for a loan received from a commercial lending
     3     institution to assist with the financing of a tourism or
     4     production agricultural project which has been the recipient
     5     of a planning grant under subsection (b) or a project which
     6     demonstrates significant private investment. The application
     7     must be on the form required by the board and must include or
     8     demonstrate all of the following:
     9             (i)  The applicant's name and address.
    10             (ii)  A description of the project.
    11             (iii)  A statement describing the likely economic
    12         impact to this Commonwealth and the host municipality as
    13         a result of the project.
    14             (iv)  A description of the project financing,
    15         including terms, conditions and the collateral or
    16         security required.
    17             (v)  The amount of the loan guarantee that is being
    18         requested.
    19             (vi)  The total project cost and the identification
    20         of all sources of capital for the project.
    21             (vii)  Any other information required by the board.
    22         (2)  The board shall review the application to determine
    23     all of the following:
    24             (i)  If the proposed project is feasible and
    25         demonstrates soundness in concept.
    26             (ii)  If the proposed collateral or security is
    27         sufficient to cover the guarantee in the event of a call.
    28             (iii)  If the applicant complied with all other
    29         criteria established by the board.
    30         (3)  Upon being satisfied that all requirements have been
    20040S1026B1459                 - 30 -     

     1     met, the board may approve the application and award a loan
     2     guarantee to the project. Loan guarantees shall be for no
     3     more than 50% of the total project cost, or $2,500,000,
     4     whichever is less. The terms of the loan guarantee must be
     5     agreed to by the commercial lending institution which is the
     6     lender of the funds subject to the guarantee. The board may
     7     establish a subcommittee composed of board members and staff
     8     of the department to supervise the progress of projects which
     9     receive loan guarantees under this section.
    10     (h)  Limitations.--
    11         (1)  Except upon foreclosure or default or violation of a
    12     loan or loan guarantee made, the board may not approve an
    13     application or finance a project if the board or authority
    14     would be required to operate, service or maintain the project
    15     under a lease or other agreement.
    16         (2)  No more than $10,000,000 of the funds in the account
    17     under section 1542 (relating to funding) may be used for
    18     grants awarded under subsection (c).
    19         (3)  At least two-thirds of the funds made available
    20     through debt incurred under section 1542 shall be used for
    21     financing of production agriculture or related projects.
    22     Section 2.  This act shall take effect in 60 days.             <--
    26  FOLLOWING:
    20040S1026B1459                 - 31 -     

     4     SECTION 3.  SECTION 5 OF THE ACT OF FEBRUARY 12, 2004
    14     IMMEDIATELY:
    15             (I)  SECTION 2 OF THIS ACT.
    16             (II)  SECTION 3 OF THIS ACT.
    17             (III)  THIS SECTION.
    19     DAYS.

    B9L64VDL/20040S1026B1459        - 32 -