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House Majority Leader to Offer RACP Reform Bill

House Majority Leader Mike Turzai (R-Allegheny) has circulated a co-sponsorship memo outlining his plans to introduce legislation to “completely reform” the Redevelopment Assistance Capital Project (RACP) grant program.

The memo states that Turzai’s office has worked with members on both sides of the aisle, and the “legislation incorporates common sense changes to bring the program (and the resulting debt load) to a more responsible and manageable level.”

The RACP program was established in 1999 with an initial debt ceiling of $1.2 billion. Since that time, the debt ceiling has been raised six times, and is currently at $4.05 billion. The memo states that there are approximately 8,000 RCAP projects itemized in the nine Itemization Acts that have passed since 1999. Most projects have not yet been authorized.

Outline of the bill is as follows:

RACP Debt Reduction

  • This legislation would immediately decrease the authority of the Commonwealth to incur debt for the purposes of RACP projects. No new projects may be authorized until existing RACP project commitments fall below $3 billion. In each year thereafter, the debt ceiling for RACP projects would be decreased by $150 million until the debt ceiling for RACP reaches $1.5 billion.

Redefining RACP

  • This legislation would shift the emphasis of RACP projects to infrastructure (i.e. roads, bridges, tunnels, waste disposal, storm water, sewage or water infrastructure; bridges or roads when part of a business or industrial park facility) projects with a total cost of $1 million of more. An eligible project must generate substantial economic activity (i.e. substantial increases in employment or tax revenues) and have a substantial regional or multijurisdictional economic impact.
  • Projects on the current itemization list that have not been authorized as of December 31, 2012 would expire. To be relisted in any future Itemization Acts, a project must comply with all new RACP requirements.
  • The current law allows the list of itemized projects (the “wish list”) to exist in perpetuity. Projects under the reformed RACP program would expire after two years and would need to be relisted.
  • Itemized capital projects must be listed under specific categories and contain a specific description of the capital project, including the senatorial and legislative district in which the project is located; the estimated cost of the project; and the fund to be charged with the repayment of the obligation to be incurred.

Stringent Review and Approval Process

  • Under the proposal, applicants must submit an application to the Office of the Budget requesting the grant for an RCAP which is included in the itemization bill. In addition to specifics about the individual project (name and address of the applicant, cost and location of the project), the applicant must ensure that the project is consistent with any existing comprehensive county plan where the project is located.
  • The applicant must also ensure that the county and municipal governing bodies where the project is located have been notified of the project; and, that the applicant has held at least one public informational meeting on the RCAP project within 10 miles of the project.
  • This legislation ensures that the secretary considers the likelihood that the infrastructure will be used upon project completion; whether the project will enable future employment opportunities or have a net positive economic impact on the surrounding community; whether the project is “shovel ready” (i.e. will commence within six months of approval), prior to a grant application being approved. The secretary is also required to hold at least one public informational meeting on any RACP project being considered for approval.
  • Once requirements have been met and a public information meeting has been held, the secretary may approve the proposal. If approved, the office shall notify the applicant and the Majority and Minority Chairs of the House and Senate Appropriations Committees as well as the state senator and state representative in whose districts the RACP project is located prior to execution of a contract.
  • Applicants will have a maximum of six months to submit the required applications and contracts. No contract may be executed if the applicant fails to submit an executed contract within six months.
  • Finally, no RACP project may be approved in the period between the date of a general election at which a Governor is elected and the third Tuesday of January next following the election.