RULES AND REGULATIONS
Title 12—COMMERCE, TRADE AND LOCAL GOVERNMENT
PENNSYLVANIA MINORITY BUSINESS DEVELOPMENT AUTHORITY
[ 12 PA. CODE CH. 81 ]
General Provisions
[46 Pa.B. 8035]
[Saturday, December 24, 2016]The Pennsylvania Minority Business Development Authority (Authority), under the authority of section 9 of the Pennsylvania Minority Business Development Authority Act (act) (73 P.S. § 390.9), amends §§ 81.111, 81.112, 81.122, 81.124, 81.131, 81.143 and 81.144.
Introduction
The act was promulgated for the express purposes of: (1) alleviating and overcoming the many barriers to business opportunity that have too long handicapped socially and economically disadvantaged persons; and (2) providing assistance, financial and otherwise, which will contribute to well-balanced National and State economies by facilitating the acquisition or maintenance of ownership of business enterprises by persons whose participation in the free enterprise system is hampered because of social or economic disadvantages. See section 2 of the act (73 P.S. § 390.2). The act created the Authority, a body corporate and politic with a 16-member board of directors composed of 4 cabinet officers, 8 persons appointed by the Governor and 4 persons appointed by the General Assembly. In 1975 the Authority promulgated regulations which describe in detail the Authority's lending and financial assistance programs, covering topics such as purpose of the program, eligible applicants and projects, application procedures, amount and terms of loans and other financial assistance, loan closing procedures, default procedures, late charges and the procedures to be used for examinations and investigations conducted by the Authority.
Analysis
This final-form rulemaking amends the regulations that impede the Authority's ability to be responsive and flexible to its target market.
Section 81.111(a)(6) (relating to eligible applicants) is amended to delete the requirement that the applicant shall commit to full time management of the company. Instead, the applicant is required to maintain complete control of the enterprise. This will allow the Authority to fund start-up businesses when the applicant will have another job until the new enterprise can financially support a full-time manager.
To delete the requirement that to be eligible, the applicant shall commit to work full-time in the enterprise for which he is seeking a loan, and if he is otherwise employed shall terminate employment prior to or at the time of closing is deleted from former § 81.111(a)(7). This will also allow the Authority to fund start-up businesses when the applicant will have another job until the new enterprise can financially support a full-time manager.
Section 81.112(a)(3) (relating to eligible projects) is amended to delete the requirement of an escrow account for project funds provided by other sources.
Section 81.122 (relating to applications, review and requirements) is amended to delete the requirement that applications be submitted through the regional offices, which no longer exist.
Section 81.124 (relating to additional conditions) is amended to delete the requirement of credit life insurance and assignments of life insurance policies as loan collateral. Life insurance can be difficult or very expensive to obtain, or both.
Section 81.131 (relating to amount and terms of loans) is amended to delete detailed requirements as to loan amounts, interest rates and job creation criteria. The amendments allow the Authority to establish these parameters through policies to be published from time to time in the Pennsylvania Bulletin.
Section 81.143 (relating to late charges) is amended to delete the requirement of a 6.0% monthly late charge.
Section 81.144 (relating to loan closing) is amended to delete the requirement of the use of an escrow fund for loan closings.
The amendments allow the Authority to quickly adapt to changing markets by modifying interest rates, loan terms, minimum and maximum loan amounts, job creation requirements and making changes to program delivery options. By embedding these fundamental elements of financing in regulations, and making them inflexible rules with the force of law, the Authority's program is frozen in its efforts to flex to changing economic conditions and thus unable to be responsive to its target market (businesses owned by socially and economically disadvantaged persons). Viable nonregulatory alternatives exist to deal with these matters, namely guidelines and descriptive application materials.
Comments and Response
Notice of proposed rulemaking was published at 46 Pa.B. 3069 (June 18, 2016), with a 30-day public comment period. No comments were received from the public, the Independent Regulatory Review Commission (IRRC), the House Commerce Committee or the Senate Community, Economic and Recreational Development Committee.
Fiscal Impact
There will be no fiscal impact on the Commonwealth, political subdivisions or the public.
Paperwork
This final-form rulemaking will allow the Authority to set forth procedures and loan parameters in written guidelines and application materials, which can be modified as market forces dictate. The Authority does not foresee new or different paperwork requirements emerging because of this final-form rulemaking.
Regulatory Review
Under section 5(a) of the Regulatory Review Act (71 P.S. § 745.5(a)), on June 2, 2016, the Authority submitted a copy of the notice of proposed rulemaking, published at 46 Pa.B. 3069, to IRRC and the Chairpersons of the House Commerce Committee and the Senate Community, Economic and Recreational Development Committee for review and comment.
Under section 5(c) of the Regulatory Review Act, the Authority shall submit to IRRC and the House and Senate Committees copies of comments received during the public comment period, as well as other documents when requested.
Under section 5.1(j.2) of the Regulatory Review Act (71 P.S. § 745.5a(j.2)), on November 16, 2016, the final-form rulemaking was deemed approved by the House and Senate Committees. Under section 5(g) of the Regulatory Review Act, the final-form rulemaking was deemed approved by IRRC effective November 16, 2016.
Effective Date
This final-form rulemaking will be effective March 24, 2017.
Sunset Date
The regulations will be monitored on a regular basis and updated as needed.
Contact Person
For an explanation of this final-form rulemaking, contact Timothy M. Anstine, Deputy Chief Counsel, Department of Community and Economic Development, 400 North Street, 4th Floor, Harrisburg, PA 17120, (717) 720-7312.
Findings
The Authority finds that:
(1) Public notice of intention to adopt the regulation has been given under sections 201 and 202 of the act of July 31, 1968 (P.L. 769, No. 240) (45 P.S. §§ 1201 and 1202) and the regulations thereunder, 1 Pa. Code §§ 7.1 and 7.2.
(2) This final-form rulemaking is necessary and appropriate for the Authority's lending program.
Order
The Authority, acting under the authorizing statute, orders that:
(a) The regulations of the Authority, 12 Pa. Code Chapter 81, are amended by amending §§ 81.111, 81.112, 81.122, 81.124, 81.131, 81.143 and 81.144 to read as set forth at 46 Pa.B. 3069.
(b) The Authority shall submit this order and 46 Pa.B. 3069 to IRRC, the House and Senate Committees, the Office of Attorney General and the Office of General Counsel for approval as to legality as required by law.
(c) This order shall take effect March 24, 2017.
CATHY ONYEAKA,
Executive Director(Editor's Note: See 46 Pa.B. 7603 (December 3, 2016) for IRRC's approval.)
Fiscal Note: Fiscal Note 4-99 remains valid for the final adoption of the subject regulations.
[Pa.B. Doc. No. 16-2255. Filed for public inspection December 23, 2016, 9:00 a.m.]
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