Regular Session 2019-2020 House Bill 2480 P.N. 3702

PRINTER'S NO. 3702

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

No.

2480

Session of

2020

INTRODUCED BY RYAN, THOMAS, READSHAW, JOZWIAK AND KEEFER,

MAY 4, 2020

REFERRED TO COMMITTEE ON FINANCE, MAY 4, 2020

AN ACT

Implementing the provisions of clause (1) of subsection (a) of

section 7 of Article VIII of the Constitution of the

Commonwealth of Pennsylvania authorizing the incurring of

debt for the rehabilitation of areas of this Commonwealth

affected by the COVID-19 disaster emergency; imposing duties

upon the Governor, the Auditor General and State Treasurer;

prescribing the procedures for the issuance, sale and payment

of general obligations bonds, the funding of debt and

refunding of bonds; exempting bonds from State and local

taxation; establishing certain funds; providing for

allocation of proceeds and for a legislative COVID-19

disaster oversight committee; and making appropriations.

TABLE OF CONTENTS

Chapter 1. Preliminary Provisions

Section 101. Short title.

Section 102. Definitions.

Chapter 3. Bonds

Section 301. Borrowing of money authorized.

Section 302. General obligation bonds authorized.

Section 303. Disposition and use of proceeds.

Section 304. Issuance of bonds, interest and maturity.

Section 305. Direct obligations, exemption from taxation and

means of payment.

Section 306. Sale of bonds.

Section 307. Temporary financing authorization.

Section 308. Disaster Relief Redemption Fund.

Section 309. Refunding bonds.

Section 310. Reporting requirements.

Section 311. Registration of bonds.

Section 312. Voting requirements.

Chapter 5. Appropriations

Section 501. Appropriations.

Chapter 7. Legislative COVID-19 Disaster Oversight Committee

Section 701. Legislative COVID-19 Disaster Oversight Committee.

Chapter 21. Miscellaneous Provisions

Section 2101. Effective date.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

CHAPTER 1

PRELIMINARY PROVISIONS

Section 101. Short title.

This act shall be known and may be cited as the COVID-19

Disaster Recovery Act.

Section 102. Definitions.

The following words and phrases when used in this act shall

have the meanings given to them in this section unless the

context clearly indicates otherwise:

"COVID-19." The novel coronavirus as identified in the

proclamation of disaster emergency issued issued by the Governor

on March 6, 2020, published at 50 Pa.B. 1644 (March 21, 2020).

"Issuing officials." The Governor, the Auditor General and

the State Treasurer.

CHAPTER 3

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BONDS

Section 301. Borrowing of money authorized.

Pursuant to the provisions of clause (1) of subsection (a) of

section 7 of Article VIII of the Constitution of Pennsylvania,

the Commonwealth is hereby authorized and directed to borrow

from time to time money not exceeding in the aggregate the sum

of $5,000,000,000, not including money borrowed to refund

outstanding bonds, notes or replacement notes, as may be found

necessary to carry out the rehabilitation of areas of this

Commonwealth affected by the COVID-19 disaster emergency.

Section 302. General obligation bonds authorized.

The indebtedness authorized under this act shall be incurred

from time to time and shall be evidenced by one or more series

of general obligation bonds or notes of the Commonwealth in the

aggregate principal amount for each series as the Governor,

Auditor General and State Treasurer shall determine, but the

latest stated maturity date shall not exceed 20 years from the

date of the bond first issued for each series.

Section 303. Disposition and use of proceeds.

(a) Deposit.--The proceeds from the sale of bonds and notes,

except refunding bonds and replacement notes, issued pursuant to

this act shall be paid to the State Treasurer for deposit into

the COVID-19 Disaster Relief Account, which is established as a

restricted receipts account within the Budget Stabilization

Reserve Fund.

(b) Dedication of funds.--Money in the COVID-19 Disaster

Relief Account is hereby specifically dedicated to meeting the

costs of the rehabilitation of areas of this Commonwealth

affected by the COVID-19 disaster emergency, including, but not

limited to, public assistance and disaster mitigation as defined

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in or authorized by The Robert T. Stafford Disaster Relief and

Emergency Assistance Act (Public Law 93-288, 88 Stat. 143), and

paying the costs and expenses of issuing bonds and notes.

purposes authorized, money held or deposited by the State

Treasurer may be invested and reinvested as are other funds in

the custody of the State Treasurer in the manner provided by

law. All earnings received from the investment or deposit of the

funds shall be paid into the State Treasury to the credit of the

COVID-19 Disaster Relief Account.

(d) Allocation of proceeds.--Subject to the total limit of

$5,000,000,000, the money authorized to be borrowed by section

301 shall be allocated as follows:

(1) (Reserved).

(2) (Reserved).

(e) Transfer of unused funds.--Money in the COVID-19

Disaster Relief Account not necessary to pay unexpired contracts

or to pay potential legal obligations shall be transferred by

the State Treasurer, with the approval of the Governor, to the

COVID-19 Disaster Relief Redemption Fund and shall be used to

pay debt service on the existing COVID-19 disaster relief bonds.

Section 304. Issuance of bonds, interest and maturity.

(a) Series and issues.--When bonds are issued from time to

time, the bonds of each issue shall constitute a separate series

to be designated by the issuing officials or may be combined for

sale as one series with other general obligation bonds of the

Commonwealth. Each series of bonds shall bear the rate or rates

of interest as may be determined by the issuing officials. The

bonds shall be issued in the denominations and in the form,

whether coupon or registered as to both principal and interest,

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and with or without provisions for interchangeability as the

issuing officials may determine. In case interest coupons are

attached, the coupons shall contain the facsimile signature of

the State Treasurer.

(b) Terms.--Except as otherwise set forth in this act, the

terms and conditions of issue, redemption and maturity and time

of payment of interest shall be as the issuing officials shall

specify. The issuing officials shall provide for the

amortization of the bonds in substantial and regular amounts

over the term of the debt. 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. 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. The issuing officials are

authorized to carry out the provisions of this act relating to

the issuance of bonds and shall determine all matters in

connection with the issuance of the bonds subject to the

provisions of this act.

this act shall bear the facsimile signatures of the issuing

officials and a facsimile of the Great Seal of the Commonwealth

of Pennsylvania and shall be countersigned by a duly authorized

officer of a duly authorized loan and transfer agent of the

Commonwealth.

Section 305. Direct obligations, exemption from taxation and

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means of payment.

All bonds issued in accordance with this act shall be direct

obligations of the Commonwealth, and the full faith and credit

of the Commonwealth are hereby pledged for the payment of the

interest on the bonds as the same shall become due and the

payment of the principal of the bonds at maturity. All bonds

issued under this act shall be exempt from taxation for State

and local purposes, except as provided under Article XXIX of the

act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code

of 1971. The principal of and interest on the bonds shall be

payable in lawful money of the United States.

Section 306. Sale of bonds.

(a) Requirements.--If bonds are issued in accordance with

this act, the bonds shall be offered for sale at not less than

98% of the principal amount of the bonds and accrued interest

and shall be sold by the issuing officials to the highest and

best bidder or bidders after due public advertisement on terms

and conditions and upon open competitive bidding as the issuing

officials shall direct. The manner and times of advertising

shall be prescribed by the issuing officials.

(b) Private sale.--Any portion of any bond issue offered and

not sold or subscribed for may be disposed of by private sale by

the issuing officials in the manner and at the prices, not less

than 98% of the principal amount of the bonds and accrued

interest, as the Governor shall direct. No commission shall be

allowed or paid for the sale of any bonds issued under the

authority of this act.

the issuing officials may in their discretion issue in lieu of

permanent bonds, temporary bonds in a form and with the

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privileges as to registration and exchange for permanent bonds

as may be determined by the issuing officials.

Section 307. Temporary financing authorization.

(a) Temporary borrowing.--Pending the issuance of bonds of

the Commonwealth as authorized, the issuing officials are

authorized, in accordance with the provisions of this act and on

the credit of the Commonwealth, to make temporary borrowings,

through public or private sale, not to exceed three years in

anticipation to the issue of bonds in order to provide funds in

the amounts as may from time to time be deemed advisable prior

to the issue of bonds. In order to provide for and in connection

with the temporary borrowings, the issuing officials are

authorized in the name and on behalf of the Commonwealth to

enter into any purchase, loan or credit agreement, or

agreements, or other agreement or agreements with any banks or

trust companies or other lending institutions, investment

banking firms or persons in the United States having power to

enter into the same, which agreements may contain provisions not

inconsistent with this act, as may be authorized by the issuing

officials.

(b) Evidence of debt.--All temporary borrowings made under

the authorization of this section shall be evidenced by notes of

the Commonwealth, which shall be issued from time to time for

amounts not exceeding in the aggregate the applicable statutory

and constitutional debt limitation, in a form and in the

denominations and subject to terms and condition of sale and

issue, prepayment or redemption and maturity, rate or rates of

interest and time of payment of interest as the issuing

officials shall authorize and direct and in accordance with this

act. The authorization and direction may provide for the

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subsequent issuance of replacement notes to refund outstanding

notes or replacement notes, which replacement notes shall, upon

issuance, evidence the borrowing, and may specify other terms

and conditions with respect to the notes and replacement notes

authorized for issuance as the issuing officials may determine

and direct.

of the issuing officials provide for the issuance of replacement

notes, the issuing officials are authorized in the name and on

behalf of the Commonwealth to issue, enter into or authorize and

direct the State Treasurer to enter into agreements with any

banks, trust companies, investment banking firms or other

institutions or persons in the United States having the power to

enter the same:

(1) To purchase or underwrite an issue or series of

issues of notes.

(2) To credit, to enter into any purchase, loan or

credit agreements, to draw money pursuant to the agreements

on the terms and conditions set forth in the agreements and

to issue notes as evidence of borrowings made under the

agreements.

(3) To appoint as issuing and paying agent or agents

with respect to notes.

(4) To perform other acts as may be necessary or

appropriate to provide for the payment, when due, of the

interest on and the principal of the notes.

(d) Terms.--The agreements under subsection (c) may provide

for the compensation of any purchasers or underwriters of notes

or replacement notes by discounting the purchase price of the

notes or by payment of a fixed fee or commission at the time of

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issuance of the notes, and all other costs and expenses,

including fees for agreements related to the notes, issuing and

paying agent costs and costs and expenses of issuance, may be

paid from the proceeds of the notes.

(e) Duties of State Treasurer.--If the authorization and

direction of the issuing officials provide for the issuance of

replacement notes, the State Treasurer shall, at or prior to the

time of delivery of these notes or replacement notes, determine

the principal amounts, dates of issue, interest rate or rates or

procedures for establishing the interest rate from time to time,

rates of discount, denominations and all other terms and

conditions relating to the issuance and shall perform all acts

and things necessary to pay or cause to be paid, when due, all

principal of and interest on the notes being refunded by

replacement notes and to assure that the same may draw upon any

money available for that purpose pursuant to any purchase, loan

or credit agreements established with respect to the notes and

replacement notes, all subject to the authorization and

direction of the issuing officials.

(f) Retirement of outstanding notes.--Outstanding notes

evidencing the borrowings may be funded and retired by the

issuance and sale of the bonds of the Commonwealth as authorized

in this act. The refunding bonds must be issued and sold not

later than a date three years after the date of issuance of the

first notes evidencing the borrowings to the extent that payment

of the notes has not otherwise been made or provided for by

sources other than proceeds of replacement notes.

(g) Disposition of proceeds.--The proceeds of all the

temporary borrowing shall be paid to the State Treasurer to be

held and disposed of in accordance with the provisions of this

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act.

Section 308. Disaster Relief Redemption Fund.

(a) Establishment.--All bonds issued under the authority of

this act shall be paid at maturity and all interest due from

time to time on the bonds and on all notes issued under this act

shall be paid from the COVID-19 Disaster Relief Redemption Fund,

which is hereby established. 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 for which other provision is not made. All money

appropriated shall be paid into the COVID-19 Disaster Relief

Redemption Fund by the State Treasurer. All money received prior

to the date for disbursement shall be invested by the State

Treasurer pending disbursement in the securities as are provided

by law for the investment of surplus money of the Commonwealth.

(b) Use of fund.--The investment of the money and the

accumulations on the investment in the COVID-19 Disaster Relief

Redemption 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 State

Treasurer, with the approval of the Governor, is authorized at

any time to use any of the funds for the purchase and retirement

of all or any part of the bonds issued under this act. No

purchase shall be made which will reduce the money in the COVID-

19 Disaster Relief Redemption Fund below the amount necessary to

pay all principal and interest still to become due in the fiscal

year of the purchase. In the event that all or any part of the

bonds shall be purchased by the Commonwealth, the bonds shall be

canceled and returned to the State Treasurer as canceled and

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paid bonds, and thereafter all payments of interest on the bonds

shall cease, and the canceled bonds and coupons shall be

destroyed as promptly as possible after cancellation but not

later than two years after cancellation. A certificate

evidencing the destruction of the canceled bonds, notes and

coupons shall be provided by the loan and transfer agent to the

issuing officials. All canceled bonds, notes and coupons shall

be mutilated as to make the canceled bonds, notes and coupons

nonnegotiable.

Section 309. Refunding bonds.

The issuing officials are authorized to provide by resolution

for the issuance of refunding bonds for the purpose of refunding

any debt issued under this act and then outstanding, either by

voluntary exchange with the holders of the outstanding debt or

to provide funds to redeem and retire the outstanding debt with

accrued interest, any premium payable and the costs of issuance

and retirement of the debt, at maturity or at any call date. The

issuance of the refunding bonds, the maturities and other

details of the refunding bonds, the rights of the holders of the

refunding bonds and the duties of the issuing officials in

respect to the refunding bonds shall be governed by the

provisions of this section insofar as they may be applicable.

Refunding bonds which are not subject to the aggregate

limitation of $5,000,000,000 of debt to be issued pursuant to

this act may be issued by the issuing officials to refund debt

originally issued or to refund bonds previously issued for

refunding purposes.

Section 310. Reporting requirements.

The State Treasurer shall determine and report to the

Secretary of the Budget by November of each year the amount of

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money necessary for the payment of interest on outstanding

obligations and the principal of the obligations, if any, for

the following fiscal year and the times and amounts of the

payments.

Section 311. Registration of bonds.

The Auditor General shall prepare the necessary registry

books to be kept in the office of the duly authorized loan and

transfer agent of the Commonwealth for the registration of any

bonds of the Commonwealth, at the request of the owners of the

bonds, according to the terms and conditions of issue specified

by the issuing officials. All bonds which are issued without

interest coupons attached shall be registered in the registry

books kept by the duly authorized loan and transfer agent of the

Commonwealth.

Section 312. Voting requirements.

Whenever in this act any action is to be taken or decision

made by the issuing officials and the three officers shall not

be able to agree unanimously, the action or decision of the

Governor and either the Auditor General or State Treasurer shall

be binding and final.

CHAPTER 5

APPROPRIATIONS

Section 501. Appropriations.

(a) Appropriation.--The net proceeds, less the costs and

expenses of issuing the obligations, of the sale of the

$5,000,000,000 of obligations authorized under this act shall be

appropriated from the COVID-19 Disaster Relief Account in

accordance with section 1703-A of the act of April 9, 1929

(P.L.343, No.176), known as The Fiscal Code, to the Governor for

allocation by the Secretary of the Budget as provided in section

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303(d).

(b) Appropriation to State Treasurer.--There is hereby

appropriated to the State Treasurer from the COVID-19 Disaster

Relief Account as much money as may be necessary for all costs

and expenses in connection with the issue of and sale and

registration of the bonds and notes in connection with this act

and the payment of interest arbitrage rebates on proceeds of

the bonds and notes.

CHAPTER 7

LEGISLATIVE COVID-19 DISASTER OVERSIGHT COMMITTEE

Section 701. Legislative COVID-19 Disaster Oversight Committee.

(a) Establishment.--A special legislative committee to be

known as the Legislative COVID-19 Disaster Oversight Committee

is established and shall be composed of the following:

(1) The Majority Leader of the Senate.

(2) The Minority Leader of the Senate.

(3) The Majority Leader of the House of Representatives.

(4) The Minority Leader of the House of Representatives.

(5) The Executive Director of the Pennsylvania Emergency

Management Agency.

(b) Powers and duties.--The Legislative COVID-19 Disaster

Oversight Committee may recommend policies for implementation of

this act to the Pennsylvania Emergency Management Agency and may

inquire into delays and issues related to distribution of public

assistance and other grants authorized under this act.

CHAPTER 21

MISCELLANEOUS PROVISIONS

Section 2101. Effective date.

This act shall take effect immediately.

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