Why must loans intended for match funding be in the form of a long-term financing instrument?
The Capital Facilities Debt Enabling Act requires that RACP projects be funded from proceeds of Commonwealth of Pennsylvania General Obligation (GO) bonds. GO bonds issued to finance the RACP grant program have a publicized maturity term of 20 years. Consequently, when an RACP grantee uses loans as match funding, they must have a maturity cycle that demonstrates the long-term viability of the project. Past experiences have shown that RACP projects that use loans as match funds are in a better position to withstand economic downturns when those loans are in the form of a long-term financing instrument.
