Pennsylvania Code
Title 12 - COMMERCE, TRADE AND LOCAL GOVERNMENT
Part III - Business Financing
Subpart C - Loans
Chapter 73 - PENNSYLVANIA INDUSTRIAL DEVELOPMENT AUTHORITY
Subchapter B - STATEMENT OF POLICY
PENALTIES
Section 73.162 - Criteria

Universal Citation: 12 PA Code ยง 73.162

Current through Register Vol. 54, No. 44, November 2, 2024

The following four criteria will be evaluated to determine if a valid explanation exists for failure to meet employment projections. Individually, each would require a "yes or no" decision by PIDA. If PIDA determines that the company has a valid explanation for any one of the following reasons, no penalty will be imposed. The criteria are:

(1) Natural disaster. Although occurring infrequently, this is the most clear-cut of the evaluation criteria. A company will not be held responsible for attaining employment projections if a natural disaster such as a fire, flood or tornado strikes the business.

(2) Industry trends. By examining sales and revenue figures for the industry in question, explanations have been given for declining industries which have been unable to produce their employment projections. Several points should be considered:

(i) When examining industry trends, only the years following occupancy of the project will be considered.

(ii) Often, crucial data is unavailable. For example, data may be available for the 2 digit Standard Industry Code (SIC) codes only, rather than for the more specific 4 digit code.

(iii) Many companies produce or manufacture under several SIC codes. One industry classification may be doing well, while three other minor industries in which the company is classified may be in decline. An evaluation of the major SIC and industry trends must be made relevant to other activities undertaken by the company, and a determination reached that the company is primarily in one or more industries which are declining. An industry is considered in decline when that industry-measured by the appropriate three digit SIC code-experiences employment declines of 10% or more over any 12-month period.

(3) Labor force. Another explanation for failure to meet job projections has been the lack of an available labor pool. While in some cases justified, this explanation will be further investigated, taking the following into consideration:

(i) Unemployment rate of the county in which the project is located does not in itself signify the absence of available labor, particularly for low skilled jobs; however, if the company requires skilled workers, or those with scarce skills, this could be a sound explanation. The Pennsylvania Occupational Information Coordinating Committee's data base is consulted for labor supply in specific skills on a geographic basis.

(ii) A determination shall be made that the business is not experiencing a labor shortfall because of the wages it offers. In this instance, the burden of proof should be on the company to demonstrate that it pays employees the average wage based on the industry-wide average for a particular region. Staff research utilizing average wage data supplied by the Department of Labor and Industry will be used to determine the validity of this explanation.

(4) Loss of major supplier/market. In some instances, the failure of a loan recipient to meet employment projections is the result of a plant closing or major layoff of a major supplier or customer, which directly affects the ability of the industrial occupant to maintain its level of business activity. Therefore, if the loss of a customer or supplier represents 25% or more of the sales of the industrial occupant or 25% or more of its purchases of materials or finished products from a supplier, this criterion will be considered valid. In this case, as in paragraph (3), the burden lies with the industrial development agency or private company to demonstrate validating proof of this criterion.

This section cited in 12 Pa. Code § 73.14 (relating to interest rate penalty for failure to create projected employment); 12 Pa. Code § 73.161 (relating to general); and 12 Pa. Code § 73.163 (relating to levying of penalties).

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