When it has been determined by the department upon application of a Solid Waste or Resource Recovery Development Agency and hearing thereon in the manner hereinafter provided, that the establishment of a particular demonstration project or development project of such development agency has accomplished or will accomplish the purposes of this act, the department may contract to grant and/or loan such development agency an amount not in excess of the percentage of the cost of such demonstration project or development project, as established or to be established as hereinafter set forth.

The department may contract to loan the development agency up to fifty percent (50%) of the cost of a solid waste disposal/processing system or a resource recovery system and grant the development agency up to seventy-five percent (75%) of the cost of a demonstration project, if it has determined that the agency holds funds or property in the amount of value of five percent (5%) or more of the cost of the development project or demonstration project, which funds or property shall be applied to the establishment of such project: Provided, That development agencies applying for loans for solid waste disposal/processing systems shall demonstrate to the department through engineering, economic, and other appropriate studies that solid waste generation and recovered materials market commitments are insufficient or unavailable to support a resource recovery system: And further provided, That (1) loans for new solid waste disposal/processing systems shall be made only to municipalities which are or are in counties of the seventh and eighth class and where said systems shall serve a minimum population of ten thousand persons, except in those cases of seventh and eighth class counties where the total population is less than ten thousand persons and in those cases said systems shall serve the total populace of those counties; (2) loans for existing solid waste disposal/processing systems shall be made only to municipalities which are or are in counties of the fifth through eighth classes: Provided, however, That after July 1, 1975 no more than fifty percent (50%) of the available fund can be used in any one year for solid waste disposal/processing systems.

In reviewing applications for loans, the department shall consider the amounts of polluting substances treated and/or eliminated, the overall environmental benefits to be accrued as a result of the projects, the amount of population served, and the extent of resource recovery to be included: And, provided further, That no loan shall be granted for a project which does not conform to the requirements of the act of July 31, 1968 (P.L. 788, No. 241), known as the “Pennsylvania Solid Waste Management Act,”¹ or a project which would jeopardize the economic stability of existing solid waste disposal/processing or resource recovery systems already approved by the department as part of officially adopted solid waste management plans, and provided no grant or loan shall be made to any municipality which is not a part of a department approved solid waste management plan.

Any such loan of the department shall be for up to thirty years and shall bear interest at the established rate and shall be secured by bond or note of the development agency and by mortgage on the development project for which such loan was made, such mortgage to be second and subordinate only to the mortgage securing the first lien obligation issued to secure the commitment of funds from independent and responsible sources and used in the financing of the development project.

Any such grants of the department made for a demonstration project shall be encumbered for a period not to exceed three years.

Moneys so granted or loaned by the department to development agencies shall be withdrawn from the Solid Waste--Demonstration Fund or Solid Waste--Resource Recovery Development Fund and paid over to the development agency in such manner as shall be provided and prescribed by the rules and regulations of the department.

All payments of interest on said loans and the principal thereof shall be deposited by the department in the fund.

Grants and loans by the department to a development agency for a demonstration project or development project shall be made only in the manner and to the extent as in this section provided except, however, in those instances wherein an agency of the Federal Government participates in the financing of a demonstration project or development project by loan, grant or otherwise of Federal funds. When any Federal agency does so participate the department may adjust the sequence ratios of financial participation by the development agency, the source of independent funds and the department in such manner as to insure the maximum benefit available to the development agency, the department, or both, by the participation of the Federal agency.

Where any Federal agency participating in the financing of a development project is not permitted to take as security for such participation a mortgage the lien of which is junior to the mortgage of the department, the department shall in such instances be authorized to take as security for its loan to the development agency a mortgage junior in lien to that of the Federal agency.