Subchapter A. GENERAL PROVISIONS
GENERAL PROVISIONS Sec.
73.1. Definitions.
73.2. Industrial development agencies—certification.
73.3. Industrial development agency code of ethics.
73.4. Training requirement.
73.5. Annual reporting requirement.
73.6. Licensed professional requirement.
73.7. Job certification.
73.8. Decertification.
LOAN AMOUNTS AND TERMS
73.11. Loan ceiling.
73.12. Job creation requirements.
73.13. Interest rates.
73.14. Interest rate penalty for failure to create projected employment.
73.15. Maturities.
73.16. Disbursement.
APPLICATION REQUIREMENTS
73.21. General.
73.22. Taxes.
73.23. Commitments and fees.
FINANCIAL CONSIDERATIONS
73.31. Industrial development projects.
MISCELLANEOUS
73.51. Conflicts of interest—attorneys.
73.52. Contractors.
73.53. Insurance proceeds.
73.54. Financial consultant to Authority.
73.55. Workouts.
73.56. Small businesses.
73.57. Use of grant funds.
73.58. Inspection by the Authority.
73.59. Statements of policy and guidelines.
Authority The provisions of this Subchapter A issued under section 9 of the Pennsylvania Industrial Development Authority Act (73 P. S. § 309), unless otherwise noted.
Source The provisions of this Subchapter A adopted November 9, 1990, effective November 10, 1990, 20 Pa.B. 5628; renumbered from 13 Pa. Code Chapter 301, May 16, 1997, effective May 17, 1997, 27 Pa.B. 2415. Immediately preceding text appears at serial pages (154363) to (154368), (167497) to (167498) and (154371) to (154374).
GENERAL PROVISIONS
§ 73.1. Definitions.
The following words and terms, when used in this chapter, have the following meanings, unless the context clearly indicates otherwise:
Act—The Pennsylvania Industrial Development Authority Act (73 P. S. § § 301—314).
Authority—The Pennsylvania Industrial Development Authority.
Beneficial owner—A person or entity other than an industrial occupant, who has acquired or will acquire title to an industrial development project from an industrial development agency, and who has leased or will lease the industrial development project to an industrial occupant. The term includes an individual, a husband and wife, a partnership or a corporation.
Industrial development agency or agency—A nonprofit corporation to which the Authority is empowered to make loans.
Industrial occupant—An enterprise which occupies and operates an industrial development project. An industrial occupant may also acquire title to an industrial development project. The term includes a sole proprietorship, a partnership or a corporation.
Job or full-time equivalent job or full-time equivalent employment—One thousand nine hundred fifty hours of compensated work per year.
Project—A site, structure, facility, land or an undertaking for which the Authority is empowered to make loans. The term includes an industrial development project, an industrial park project and a multiple-tenancy building project, as defined in the act.§ 73.2. Industrial development agencies—certification.
(a) An industrial development agency will not be eligible to apply for, or receive assistance from, the Authority until it has been certified by the Authority under this section. An application for certification shall contain the following:
(1) Articles of incorporation on file with the Department of State and bylaws of the agency which indicate industrial development as a purpose. Either the articles of incorporation or the bylaws shall provide that membership in the agency is open to all persons interested in industrial development willing to pay the agency’s dues, and that the management of the agency is vested in a board of directors elected by the full membership of the agency.
(2) A good standing certificate of the agency issued by the Department of State.
(3) A certified resolution of the agency adopting the code of ethics at § 73.3 (relating to industrial development agency code of ethics).
(4) A list of current members and the organization, if any, each represents.
(5) A brief resume of each current board member.
(6) A brief resume of the executive director or other officer of the agency principally involved with the Authority’s program, and each staff member.
(7) The location of the permanent office of the agency, a list of other organizations utilizing the office and a description of the activities of the other organizations.
(8) The current or proposed membership dues structure of the agency and a list of other anticipated revenues.
(9) Indication of a broad-based private sector support evidenced by a fundraising drive which satisfies the following criteria:
(i) A minimum of $10,000 is raised.
(ii) There are a minimum of 25 contributors for each 100,000 in population of the geographic area served by the agency, but in no case fewer than 25 contributors.
(10) An industrial development plan of the agency, including an explanation of the need for a new agency in the geographic area the agency will serve.
(11) A bound copy of the latest financial statement of the agency prepared by an independent certified public accountant.
(12) A statement as to the geographic area the agency will serve.
(13) A statement of the service fee the agency will charge.
(b) After the submission of a complete application for certification by an agency, the Authority will certify the agency as eligible to apply for, and receive assistance from, the Authority if the Authority determines that the following exist:
(1) The services of other agencies in the area are not sufficient to address the needs which the applicant agency intends to address.
(2) Full-time, part-time or volunteer staff services by persons with backgrounds in industrial development will continue to be available to the agency.
(3) Operating funds will continue to be available to the agency.
(c) The first application for assistance for a project submitted by an agency to the Authority shall demonstrate a substantial financial participation by the agency in the project. A substantial financial participation will be 5% of the total project cost or a minimum participation amount, whichever is less. The agency’s participation may be made, at the Authority’s discretion, through funds or property of the agency or funds or property received from or committed to the project by the beneficial owner or the industrial occupant. The minimum participation amount will be determined by the Authority based on unemployment statistics, inflation, the Authority’s cash flow and the need to keep the Commonwealth and its business competitive, and will be published as a notice in the Pennsylvania Bulletin.
§ 73.3. Industrial development agency code of ethics.
(a) The following applies to industrial development agencies:
(1) An officer, director or employe of an agency who is a party to or who is interested in a project shall disclose the nature and extent of the interest to the board of directors of the agency, and may not vote on action of the agency concerning the project, nor participate in the deliberations of the agency concerning the project.
(2) A consultant or independent contractor of an agency who is a party to or who is interested in a project shall immediately disclose the nature and extent of the interest to the board of directors of the agency.
(3) The disclosures required under paragraphs (1) and (2) include the existence of:
(i) A financial interest in a project.
(ii) An interest of a relative by blood or marriage in a project.
(iii) An employer-employe, partnership, agency or fiduciary relationship with a party to or a person financially interested in a project.
(iv) A matter which might reasonably be expected to influence that person in the discharge of the person’s official duties concerning a project.
(4) The board of directors of the agency shall take action which is necessary in light of the facts revealed by the disclosure to avoid a conflict of interest or impropriety with regard to a project. The disclosure statement of the officer, director, employe, consultant or independent contractor, and action by the board of directors, shall be made a part of the minutes of the agency at the next regular or special meeting and shall be disclosed to the Authority.
(b) No officer, director, employe, consultant or independent contractor of an agency may solicit, accept or receive from a person, firm, corporation or other business or professional organization a gift, loan, gratuity, favor or service that might influence his position in the discharge of his official duties concerning a project. This paragraph does not apply to gifts and business entertainment of less than $50.
(c) No officer, director, employe, consultant or independent contractor of an agency may directly or indirectly use for personal gain information not available to the public concerning projects which comes to him as a result of affiliation with an agency, nor may he provide that information to others not directly connected with an agency’s investigation concerning the feasibility, development or establishment of a project.
(d) Each agency shall cause a copy of this section to be given to each officer, director, employe, consultant and independent contractor of the agency. A copy of this section shall also be given to each proposed beneficial owner and industrial occupant.
(e) Failure to disclose or another breach of this section is grounds for disciplinary action by the agency against the officer, director, employe, consultant or independent contractor of an agency, which disciplinary action may include removal or dismissal, and is grounds for disapproval of an application or rescission of a commitment by the Authority.
Cross References This section cited in 12 Pa. Code § 73.2 (relating to industrial development agencies—certification); and 12 Pa. Code § 73.8 (relating to decertification).
§ 73.4. Training requirement.
(a) Each industrial development agency shall cause at least one officer or staff member whose primary responsibility includes the Authority program to attend at least once during each calendar year a training seminar sponsored or cosponsored by the Authority. An officer of the Authority will certify as to the attendance.
(b) The Authority will sponsor annually a conference or training program to satisfy the requirements of subsection (a). Sponsorship may include the actual conduct of a conference or training program by the Authority, or the approval by the Authority of a conference or training program offered by a third party.
Cross References This section cited in 12 Pa. Code § 73.8 (relating to decertification).
§ 73.5. Annual reporting requirement.
Each industrial development agency shall submit annually to the Authority the following:
(1) Financial statements of the agency prepared by an independent certified public accountant. After reviewing the financial statements, the Authority may require an independent audit of the agency’s records.
(2) A list of the agency’s current officers.
(3) The agency’s current mailing address and telephone number.
(4) A statement of the current service fee charged by the agency.
(5) Copies of the agency’s current articles of incorporation and bylaws if they are amended during the previous year.
(6) A statement of the action taken by the agency with respect to the agency’s projects that are delinquent in repayment to the Authority.
Cross References This section cited in 12 Pa. Code § 73.8 (relating to decertification).
§ 73.6. Licensed professional requirement.
When the Authority has consistently experienced problems in obtaining information from an agency, which is needed to grant final engineering approval to projects under § § 73.141, 73.144 and 73.147 (relating to engineering guidelines), the Authority may require the agency to retain at least one licensed architect or licensed professional engineer to assist the Authority’s engineer in conducting his review of the agency’s projects. The industrial development agency’s engineering costs for a project will be an eligible project cost.
Cross References This section cited in 12 Pa. Code § 73.8 (relating to decertification).
§ 73.7. Job certification.
The industrial development agency and the industrial occupant shall certify to the Authority for the third, fourth and fifth year after the occupancy of each project the number and types of jobs that exist at the project site and other information requested by the Authority.
Cross References This section cited in 12 Pa. Code § 73.8 (relating to decertification).
§ 73.8. Decertification.
If an agency fails to comply with § § 73.3—73.7, the Authority may decertify the agency, and the agency shall cease to be eligible to apply for, or receive assistance from, the Authority.
LOAN AMOUNTS AND TERMS
§ 73.11. Loan ceiling.
The Authority may establish maximum loan amounts. In establishing maximum loan amounts the Authority will consider unemployment statistics, inflation, the Authority’s cash flow, and the need to keep the Commonwealth and its businesses competitive. Notice of maximum loan amounts will be published as a notice in the Pennsylvania Bulletin at the same time notice of the establishment of interest rates is published under authority of § 73.13 (relating to interest rates).
§ 73.12. Job creation requirements.
The Authority may establish minimum levels of job creation for its loans, or a requirement that one new job be created for a certain amount of funds loaned, which shall be known as the PIDA cost per job. In establishing a PIDA cost per job the Authority will consider unemployment statistics, inflation, the Authority’s cash flow and the need to keep the Commonwealth and its businesses competitive. Notice of job creation requirements will be published as a notice in the Pennsylvania Bulletin at the same time notice of the establishment of interest rates is published under authority of § 73.13 (relating to interest rates).
§ 73.13. Interest rates.
Interest rates on the Authority’s loans, including penalty interest rates for delinquent loans, will be set by the Authority and will become effective when the Authority prescribes. In setting interest rates the Authority will consider unemployment statistics, market interest rates, the Authority’s cash flow and the need to keep the Commonwealth and its businesses competitive. Projects designated as advanced technology projects by the Department, projects located in areas designated as enterprise zones, planning stage enterprise zones or distressed areas and projects affecting industries designated by the Department as Statewide or regional strategic industries, may receive special low interest rates. Notice of the Authority’s interest rates will be published annually as a notice in the Pennsylvania Bulletin.
Cross References This section cited in 12 Pa. Code § 73.11 (relating to loan ceiling); 12 Pa. Code § 73.12 (relating to job creation requirements); and 12 Pa. Code § 73.121 (relating to general).
§ 73.14. Interest rate penalty for failure to create projected employment.
Job creation projections shall be required on applications for assistance from the Authority for industrial development projects. Industrial occupants have 3 years from the date of occupancy of the project to meet the job projections. Jobs created at the project site after the industrial development agency agrees to sponsor the project will be counted by the Authority. The loan documents may provide that an increased interest rate may be imposed on a project which fails to meet its 3-year employment projections, under § § 73.161—73.163 (relating to penalties).
§ 73.15. Maturities.
(a) The Authority may establish maximum terms for its loans. In establishing maximum loan terms, the Authority will consider the current state of the commercial lending market and the need to keep the Commonwealth and its businesses competitive. In any case, the Authority will have discretion to establish the term for an individual loan based on sound commercial lending practices. The term of an individual loan made by the Authority may be, but is not required to be, as long as the term of the first lien mortgage loan obtained for the project from an independent and responsible financial source. The maximum loan term established by the Authority will be published as a notice in the Pennsylvania Bulletin.
(b) If the industrial development agency or its affiliate elect to participate in the project with its own funds, the term of its loan shall be at least as long as the term of the Authority loan.
§ 73.16. Disbursement.
The Authority loan will be disbursed to reimburse the industrial development agency for eligible project costs incurred and invoiced. Disbursements will be based on information disclosed by an affidavit as to project costs incurred and invoiced and shall be made under § 73.307 (Reserved).
APPLICATION REQUIREMENTS
§ 73.21. General.
Applications for assistance submitted by an industrial development agency include items required by the act, as well as other items the Authority may require to establish the eligibility and credit-worthiness of the proposed project, and on forms and in accordance with submission deadlines the Authority prescribes.
§ 73.22. Taxes.
If a beneficial owner, industrial occupant or an affiliate thereof is delinquent on taxes due the Commonwealth, the application will not be considered until the taxes are paid in full or evidence is presented of a satisfactory arrangement agreed to by all parties or the funds in question are placed into an escrow account in form and substance satisfactory to the Authority.
§ 73.23. Commitments and fees.
A commitment issued by the Authority is not effective until the industrial development agency and the industrial occupant and, if applicable, the beneficial owner of the project have accepted and acknowledged the commitment and paid the commitment fee established by the Authority.
FINANCIAL CONSIDERATIONS
§ 73.31. Industrial development projects.
(a) An industrial development project may be sold or leased only to a responsible buyer or a responsible tenant. A responsible buyer or responsible tenant shall have the financial ability to repay the Authority’s loan and the financial ability to repay working capital and equipment financing necessary for the establishment and operation of a completed project.
(b) The application for an industrial development project shall include financial statements of the proposed responsible buyer or responsible tenant, parent company and proposed guarantors, if any. The specific form of financial statements and other documentation required to be filed are set forth in the Authority’s statement of policy in Subchapter B (relating to statement of policy).
(c) The application for an industrial development project which involves a new entity as a responsible buyer or responsible tenant will require the submission of personal financial statements from the major investors and the submission of pro forma balance sheets and projected income statements and cash flows for the new entity. The specific form of financial statements and other documentation required to be filed are set forth in the Authority’s statement of policy in Subchapter B.
(d) Financial statements submitted to the Authority shall be prepared by an independent certified public accountant, unless specifically waived in writing by the Authority.
(e) In determining whether a responsible buyer or responsible tenant exists, the Authority will consider the following financial factors:
(1) Form and content of financial statements, whether audited, reviewed or compiled.
(2) Equity of the responsible buyer or responsible tenant and guarantors, if any, in relation to the total project cost.
(3) Income in relation to the total project cost.
(4) Extraordinary items of income and expenses reflected in the statements of income.
(5) Cash flow in relation to project debt service.
(6) Current working capital ratio.
(7) Total debt to equity ratio.
(8) Trends of sales and net income.
(9) Contingent liabilities.
(10) Financial ability to adequately finance the working capital and equipment requirements of the industrial development project.
(11) Industry factors relevant to a particular industrial development project.
(12) Other factors determined by the Authority to be relevant to a particular application.
(f) The Authority will require, for a loan made by the Authority, security or collateral sufficient to adequately guarantee repayment of the Authority loan. The security required for any particular loan will be determined by the Authority on a case by case basis utilizing sound principles of lending practice. The type of security that may be required by the Authority is set forth in the Authority’s statement of policy in Subchapter B.
MISCELLANEOUS
§ 73.51. Conflicts of interest—attorneys.
The industrial development agency and the beneficial owner or industrial occupant may not be represented by the same attorney or law firm in matters relating to the Authority’s loans, nor may the same attorney or law firm represent both the Authority and either an industrial development agency or a beneficial owner or industrial occupant in a matter without the consent of the Authority.
§ 73.52. Contractors.
An industrial occupant, beneficial owner or a related firm may act as the general contractor on a project as long as work is performed by unrelated contractors. If an industrial occupant, beneficial owner or a related firm is performing its own work using its own forces or equipment the following restrictions apply:
(1) The project shall be completed and costs approved by the Authority engineer prior to the Authority’s loan closing.
(2) Only materials and the cost of independent subcontractors, and not labor or overhead, will be eligible for Authority financing.
§ 73.53. Insurance proceeds.
If a project is intended to replace a facility destroyed by fire or other casualty, the insurance proceeds for the destroyed real estate shall be invested into the new project.
§ 73.54. Financial consultant to Authority.
The Authority will engage the services of an independent financial consultant to advise the Authority on the financial ability of responsible buyers and responsible tenants, and to provide other financial analysis as required or desired. The Authority will consider this and other information available from all sources in reaching a decision on an application for loan assistance or other request put before the Authority.
§ 73.55. Workouts.
The requirements in this chapter, which are not otherwise mandated by the act, are not applicable to loans made, assigned or amended pursuant to a workout plan relating to a prior loan made by the Authority, whether the borrower is the same or a different entity. The primary purpose of the Authority in pursuing a workout plan is to minimize financial loss to the Authority.
§ 73.56. Small businesses.
(a) In determining whether a business qualifies as a small business, and therefore is eligible for increased Agency participation, the Authority will require the principals of the business and the business itself to submit a disclosure statement listing the ownership interests held by the principals or the business in other businesses. This disclosure statement will include the percentage of the interest owned and the annual full-time equivalent employes of the other business. If the interest owned by the principals or the business is 51% or more, the Authority will consider the other business to be an affiliate of the business and the annual full-time equivalent employment of the other business will be used in determining the total full-time equivalent employment of the business.
(b) The annual basis for determining full-time equivalent employment will be the 12 months preceding the date on which the application is submitted to the Authority.
§ 73.57. Use of grant funds.
The use of Federal, State or local government grants or private grants for an industrial development project will reduce the cost of the project for the purpose of determining the level of the Authority’s participation.
§ 73.58. Inspection by the Authority.
Each industrial development agency, beneficial owner and industrial occupant which applies for and receives a loan from the Authority, or which receives direct benefits from an Authority loan, will permit authorized employes or agents of the Authority or the Commonwealth to inspect the plant, books and records during regular business hours, upon the reasonable request of the Authority. Inspection will be limited to aspects of the plant, books and records directly related to an application for a loan, the use of loan proceeds or repayment of a loan.
§ 73.59. Statements of policy and guidelines.
The Authority may issue statements of policy or guidelines as necessary to implement this chapter and the act. See Subchapter B (relating to statement of policy).
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