§ 106.3. Eligibility.
(a) Eligible applicants.
(1) Borrowers shall be aquaculture enterprises whose project is located within this Commonwealth.
(2) Each applicant approved for participation shall comply with the criteria established by the act and this chapter, including the general program requirements and all licensing and governmental permitting requirements.
(3) Projects whose applicants, principals, primary consultants or senior employees, or both, have criminal indictments or convictions or have been directly associated with two or more aquaculture ventures which have not been successful in the opinion of the Department, as set forth in subsection (e)(4), may be deemed ineligible.
(b) Eligible activities.
(1) The APDP will provide loan or loan guarantees to approved applicants for development or improvement of aquaculture production facilities. Projects may consist of land, buildings, machinery and equipment, construction or renovation costs, working capital, environmental stewardship and compliance and training which needs to be acquired, or used as part of a for-profit project or venture by an aquaculture enterprise.
(2) For a project to be eligible for environmental stewardship and compliance funds, the project shall bring the borrower into compliance with the environmental laws or regulations that are sought to be addressed by the project or the project shall adopt generally acceptable pollution prevention and environmental stewardship practices.
(3) Projects shall have a direct relationship to increasing the breadth and profitability of aquaculture production within this Commonwealth.
(c) Eligible costs.
(1) Land costs. Land costs may include acquisition, site preparation and testing, utilities, site mapping, legal and other related costs. To be eligible, land costs shall be directly associated with the purchase, renovation or new construction of a building or production facility to be used for aquaculture.
(2) Building costs. Building costs may include building acquisition, construction, rehabilitation and engineering, architectural, legal and other related costs.
(3) Machinery and equipment costs. Machinery and equipment costs may include costs of acquisition, delivery and installation. These costs are eligible if associated with acquisition of machinery and equipment that the borrower has newly purchased, even if the machinery had previously been in service with an unrelated user. Costs of mobile equipment are eligible only if the equipment is not titled or registered for highway use.
(4) Working capital. Capital used by an aquaculture enterprise for operations including personnel, marketing and training costs.
(d) Limitations. The following limitations apply to eligible costs:
(1) Eligible costs of land, buildings and machinery and equipment are limited to actual costs incurred by the borrower. Unrealized appreciation in value may not be considered in determining eligible costs.
(2) Fees charged to the borrower by brokers, finders, financing consultants and economic agencies are not eligible project costs, except that fees payable to the Department, if any, and fees and expenses charged to the borrower by an ALO or local service provider may be included as part of the eligible project cost.
(3) Costs of a borrower’s own employees are treated as working capital expenditures and are subject to the program’s limitations on working capital financing even if the costs are incurred in connection with land acquisition or preparation, building acquisition or construction, or machinery and equipment acquisition and installation.
(e) Restrictions.
(1) No delinquencies. The borrower and its principals may not be delinquent in or in default of an existing private or public loan relating to the borrower, unless they have entered into a refinancing/payback agreement satisfactory to the respective creditors and are fully in compliance with the terms of that agreement. The borrower and its principals shall be required to execute an affidavit to that effect. For the purposes of this program, a ‘‘principal’’ of a borrower is a record or beneficial owner of 20% or more of an ownership interest in the borrower.
(2) Taxes current. The borrower and its principals shall be current in payment of all applicable Federal, State and local taxes unless they have entered into a workout agreement satisfactory to the respective taxing authority and are fully in compliance with the terms of that agreement. The borrower and its principals will be required to execute an affidavit to that effect.
(3) Conflicts of interest. The borrower and its principals and managerial officers shall disclose any potential conflicts of interest with any officials or employees of the Commonwealth or with any officials or employees of the ALO or local service provider involved in submission of the borrower’s application. A member of the Advisory Committee may apply for a loan under this subchapter provided all decisions regarding the loan application are subject to 65 Pa.C.S. § 1103(j) (relating to restricted activities) and the action does not violate the State Adverse Interest Act (71 P. S. § § 776.1—776.9), or 4 Pa. Code Chapter 7, Subchapter K (relating to code of conduct for appointed officials and State employees). Members of the Advisory Committee shall supply a signed statement with their application certifying they have complied with the referenced codes. Copies of the codes will be made available to members upon request.
(4) Nonsuccessful aquaculture ventures. The borrower, its principals, primary consultants or senior employees may not have been directly associated—such as being Executive Officers, Board members, senior management, partners, principals, consultants or senior employees—with aquaculture ventures which did any of the following:
(i) On two or more occasions resulted in financial losses for the principal investors, shareholders or clients.
(ii) On two or more occasions declared bankruptcy.
(iii) Have existing violations of local, State, Federal or international law.
(iv) Had a license denied, suspended or revoked or were forced to suspend or cease operations because of past violations of local, State, Federal or international law.
(f) Verification of funding sources and uses. The borrower shall provide documentation verifying the project costs and sources of funds being used for the project under consideration. Each projected source of funds shall show what the funds will be used for and provide proof that the funds are available and committed to the project. The borrower shall also provide copies of any applications for project funds from other sources and whether those requests were approved or denied.
(g) Nonprejudicial approvals.
(1) The borrower, with the approval of the ALO or local service provider, may request nonprejudicial approval from the Department. If the Department grants nonprejudicial approval, the borrower may continue with the project while its loan is under review. In these instances, the borrower is continuing at its own risk in the event the ALO, local service provider or the Department does not approve the loan.
(2) Prior to receiving nonprejudicial approval, the borrower may place orders, sign sales agreements and make security deposits on machinery and equipment and land and buildings prior to approval by the local service provider, ALO or the Department without making its project ineligible.
(3) A project will be ineligible unless there is a nonprejudicial approval in place, if the borrower, prior to accepting the commitment letter and returning it to the Department does any of the following:
(i) Occupies land or buildings to be financed with the loan.
(ii) Installs or uses the machinery and equipment except under a short-term lease or similar arrangement subject to cancellation by the borrower without substantial penalties.
(iii) Finances any working capital needs.
(4) When the local service provider or ALO has approved the borrower’s request for a nonprejudicial approval, the Department may also grant nonprejudicial approval to allow the total aquaculture operation to be considered as the total eligible project cost if the renovations or expansion being considered will allow the farm to meet new environmental standards or economic efficiencies that allow the farm to sustain economic viability under current markets.
(h) Funds available basis. Program activities will not be undertaken unless funds are available.
(i) Use of funds. Funds received through an APDP loan may be used for land and building acquisition, land and building improvements, building/facility renovation and new construction, machinery and equipment acquisition and installation, environmental stewardship and compliance, working capital and training. The project shall be directly related to production aquaculture. An APDP loan for processing of aquaculture products is eligible only if part of a total project for an integrated aquaculture production operation and at least 80% of the aquacultural product processed is produced within this Commonwealth.
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