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From the archives 2019

Canceled meetings and finger-pointing plague top Pa. economic development agency

by Charlotte Keith |

The Commonwealth Financing Authority is overseen by a seven-member board, but appointees from the state legislature have more power than the others.
Kalim A. Bhatti/Philadelphia Inquirer

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In a half hour meeting, the Commonwealth Financing Authority — Pennsylvania’s mammoth economic development engine — can approve millions of dollars for projects ranging from local sewer systems and parking lots to dairy farms and downtown facelifts.

But recently, long delays between meetings have held up funding for projects. And the resulting finger-pointing over who is to blame provides a glimpse into the politics surrounding the hundreds of millions of dollars the authority doles out each year.

In particular, some familiar with the process say that nearly all deliberation and decision-making about which projects to support generally take place behind closed doors, making the public board meetings largely ceremonial.

When board members disagree, meetings are sometimes cancelled rather than letting those disagreements spill into the public forum, they say. As a result, a handful of disputed projects can sometimes delay the entire agenda.

“When the board goes for months without meeting and then meets just to approve things unanimously, it leads us to believe deliberation that ought to be public record is being intentionally pushed into secret,” said Andrew Abramczyk, a senior policy analyst at the Commonwealth Foundation, a conservative think tank.

Created in 2004 as part of former Gov. Ed Rendell’s economic stimulus plan, the authority is now one of the largest grantors of public money for economic development and infrastructure projects. This year alone, it has doled out nearly $284 million in state funding, significantly more than the Department of Community and Economic Development.

The authority is staffed by state employees in the department who review applications and make recommendations. But final decision-making power rests with the authority’s seven-member board. Three board members — the secretaries of banking, budget, and economic development — are appointed by the governor. The other four are chosen by the leaders of each of the legislative caucuses.

But not all board members have the same power.

In order to garner support for the authority’s creation, Rendell struck a deal with the Republican-controlled legislature at the time: Projects would need five votes for final approval, with all four of the legislative appointees voting in favor.

That essentially gives each of them veto power: without consensus, nothing can get done.

Some say this structure works well, forcing compromise and bipartisan cooperation. Others complain that it makes the process more political, and the horse-trading required to get everyone on board slows down approvals. Demand for funding from the authority usually far exceeds the amount of money available, creating intense competition.

The board usually meets every other month, but recently, meetings have been repeatedly cancelled, leaving months-long stretches during which no funding can be given out. The board did not meet between September 2015 and July 2016, a gap of almost 10 months. In 2017, more than five months elapsed between meetings. And, after meeting in September 2018, the board did not meet again until this past March, a six-month delay.

In April, House Speaker Mike Turzai (R., Allegheny) introduced legislation that would require the authority to meet six times a year. At only 40 words, the bill itself is straightforward. It passed the House in the spring, and was advanced by a Senate committee last month.

But few can agree on why the authority’s board needs a legislative slap on the wrist in the first place, especially since the legislative appointees wield so much power.

In a press release announcing the bill, Turzai said “there is no reason to delay or cancel meetings because board members intend to vote against certain proposed projects.” But in an interview, he backed off, saying this was “second or third-hand” information.

Turzai blamed the governor’s office and Dennis Davin, the secretary of the state’s economic development department, who chairs the board and is responsible for scheduling meetings.

“The delays are due to the fact that the governor’s office doesn’t want everyone to meet for a variety of reasons,” he said, without going into specifics.

Davin, however, disputed Turzai’s contention, saying it’s the legislative appointees who are responsible for the delays because the board cannot meet unless all four are present. When they aren’t available, he said, meetings have to be cancelled.

“They know upfront when all the meetings are,” he said. “We expect all of them to attend.”

A spokeswoman for Joe Scarnati, the Republican leader of the Senate, said in a statement that meetings are sometimes delayed because more time is needed to reach a consensus.

But Scarnati’s appointee to the board, D. Raja, said he’s “really not sure” why meetings have been delayed. Regardless, he said he supports Turzai’s bill.

In a statement, a spokeswoman for Senate Minority Leader Jay Costa (D., Allegheny) echoed Davin’s argument. Costa’s board appointee, Austin Burke, declined to comment. And a spokesman for House Minority Leader Frank Dermody (D., Allegheny) said House Democrats overwhelmingly support mandating a regular meeting schedule.

“It’s always challenging to reach consensus when there are competing interests, but the CFA over a period of years has managed to do that work,” the spokesman, Bill Patton, said. “Each of the projects stands on their own and if you have a regular meeting schedule, that should keep things moving fairly well.”

Dermody’s appointee to the board, Marc Little, did not respond to requests for comment.

Turzai’s appointee to the authority’s board, Philadelphia real estate developer Michael Karp, said in a statement that he agreed with the speaker’s intention that meetings should be held regularly, even if board members disagree about some projects, “so that other projects that are not in contention can be voted on.”

Karp tends to be one of the more outspoken board members: questioning, for instance, if private companies should receive loans instead of grants, and often asking for more financial information from applicants. When there have been dissenting votes, they often have come from him.

But meeting minutes from the past few years show public dissent is rare. Board meetings tend to be cordial and brisk, with unanimous votes on blocks of dozens of projects at once, often with little discussion.

As of September, the last time a board member voted against a project was four years ago.

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