act-2004-0-67•Pennsylvania Act 2004-67 — CAPITAL FACILITIES DEBT ENABLING ACT - BORROWING LIMITATIONS, BOND TERMS AND CONDITIONS, CAPITAL DEBT FUND, ETC.
Pennsylvania Act 2004-67 — CAPITAL FACILITIES DEBT ENABLING ACT - BORROWING LIMITATIONS, BOND TERMS AND CONDITIONS, CAPITAL DEBT FUND, ETC.
act-2004-0-672004 Pa. Act 67Law
Act text
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
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