1Amending the act of July 10, 1987 (P.L.246, No.47), entitled "An
2act empowering the Department of Community Affairs to declare
3certain municipalities as financially distressed; providing
4for the restructuring of debt of financially distressed
5municipalities; limiting the ability of financially
6distressed municipalities to obtain government funding;
7authorizing municipalities to participate in Federal debt
8adjustment actions and bankruptcy actions under certain
9circumstances; and providing for consolidation or merger of
10contiguous municipalities to relieve financial distress,"
11further providing for title of act; providing for declaration
12of fiscal emergencies and receivership in municipalities;
13authorizing certain taxes; providing for disincorporation of
14municipalities and the establishment of unincorporated
15service districts; establishing the Unincorporated Service
16District Trust Fund; and making extensive amendments,
17additions and editorial changes.

18The General Assembly of the Commonwealth of Pennsylvania
19hereby enacts as follows:

20Section 1. The title of the act of July 10, 1987 (P.L.246,
21No.47), known as the Municipalities Financial Recovery Act, is
22amended to read:

23AN ACT

1Amending the act of July 10, 1987 (P.L.246, No.47), entitled "An
2act empowering the Department of Community [Affairs] and 
3Economic Development to assist municipalities in avoiding 
4financial distress; declare certain municipalities as
5financially distressed; providing for the restructuring of
6debt of financially distressed municipalities; limiting the
7ability of financially distressed municipalities to obtain
8government funding; authorizing municipalities to participate
9in Federal debt adjustment actions and bankruptcy actions
10under certain circumstances; authorizing certain taxes; and
11providing for [consolidation or merger of contiguous
12municipalities to relieve financial distress] the 
13disincorporation of municipalities and the establishment of 
14unincorporated service districts.

15Section 2. Section 102 of the act, amended Oct. 20, 2011 
16(P.L.318, No.79), is amended to read:

17Section 102. Purpose and legislative intent.

18(a) Policy.--It is hereby declared to be a public policy of
19the Commonwealth to foster fiscal integrity of municipalities so
20that they provide for the health, safety and welfare of their
21citizens; pay principal and interest on their debt obligations
22when due; meet financial obligations to their employees, vendors
23and suppliers; and provide for proper financial accounting
24procedures, budgeting and taxing practices. The failure of a
25municipality to do so is hereby determined to affect adversely
26the health, safety and welfare not only of the citizens of the
27municipality but also of other citizens in this Commonwealth.

28(b) Legislative intent.--The General Assembly finds and 
29declares as follows:

30(1) It is the intent of the General Assembly to:

1(i) Enact procedures to provide municipalities
2showing early indicators of financial distress with
3training and technical and financial assistance.

4[(i)] (ii) Enact procedures and provide powers and
5guidelines to ensure fiscal integrity of municipalities
6while leaving principal responsibility for conducting the
7governmental affairs of a municipality, including
8choosing the priorities for and manner of expenditures
9based on available revenues, to the charge of its elected
10officials, consistent with the public policy set forth in
11this section.

12[(ii)] (iii) Enact procedures for the adjustment of
13municipal debt by negotiated agreement with creditors.

14[(iii)] (iv) Provide for the exercise of the
15Commonwealth's sovereign and plenary police power in
16emergency fiscal conditions to protect the health, safety
17and welfare of a municipality's citizens when local
18officials are unwilling or unable to accept a solvency
19plan developed for the benefit of the [community]
20municipality.

21(v) Provide for the exercise of the Commonwealth's
22sovereign and plenary power to establish and abolish
23local government units and provide essential services in
24areas of this Commonwealth in which the fiscal integrity
25of existing local government units cannot be sustained.

26(2) Changing and deteriorating economic conditions,
27developing technologies and attendant unemployment erode
28local tax bases and threaten essential municipal services.
29Under such circumstances, such distressed governmental units
30may no longer be viable and that the citizens of those

1communities should be granted the opportunity in accordance 
2with law to voluntarily consolidate or merge their
3municipalities with other municipalities in an effort to
4allow municipal boundaries to reflect the geographic and
5economic realities of a distressed area, to merge a common
6community of interest, to take advantage of economies of
7scale in providing services and to create an expanded revenue
8base to provide necessary public services to the citizens of
9financially distressed municipalities.

10(3) Policies of certain municipalities are so
11ineffective and the financial conditions so severe that the
12provision of vital and necessary services is threatened.

13(4) Sustained failure of a municipality to enact or
14implement a fiscal plan to adequately address or prevent
15insolvency after repeated opportunities to do so:

16(i) constitutes a fiscal emergency; and

17(ii) signifies:

18(A) a breakdown in the function of municipal
19government;

20(B) a dereliction of its elected officials'
21paramount public duty to safeguard the health, safety
22and welfare of its citizens; and

23(C) a threat to the fiscal stability of
24neighboring communities.

25(5) Pursuant to the Commonwealth's paramount right and
26duty to maintain law and order and protect and preserve the
27health, safety and welfare of its citizens and ensure
28compliance with this act under Article IX of the Constitution
29of Pennsylvania, the Governor is authorized to act in the
30face of a fiscal emergency under paragraph (4)(i) and

1dereliction of official duty under paragraph (4)(ii)(B).

2(6) Municipalities may face such deteriorated economic 
3conditions that all reasonable efforts to restore economic 
4viability have failed and merger or consolidation cannot 
5occur through any means provided by law. It is the intent of 
6the General Assembly that, for municipalities incapable of 
7continuing to function as general purpose units of local 
8government, procedures exist to ensure the provision of 
9essential and vital public services to the residents of those 
10areas absent a functioning municipal government.

11Section 3. Section 103 of the act, repealed Oct. 13, 1994
12(P.L.596, No.90) and added July 5, 2012 (P.L.1104, No.133), is 
13amended to read:

14Section 103. Definitions.

15The following words and phrases when used in this act shall
16have the meanings given to them in this section unless the
17context clearly indicates otherwise:

18"Arbitration settlement." An adjustment or settlement of a
19collective bargaining agreement or dispute. The term includes a
20final or binding arbitration award or other determination.

21"Authority." A municipal authority, parking authority or any
22other authority or corporate entity that is directly or
23indirectly controlled by a distressed municipality or to which a
24distressed municipality has power of appointment.

25"Basis of accounting." Revenues and expenditures may be
26recognized on the cash, modified accrual or full accrual basis
27of accounting, provided that basis is applied consistently
28throughout the fiscal periods reported for evaluation purposes.

29"Chief executive officer." Mayor in a mayor-council form of
30government or manager in a council-manager form of government of

1a city operating under an optional form of government pursuant
2to the act of July 15, 1957 (P.L.901, No.399), known as the
3Optional Third Class City Charter Law; a mayor of a city of the
4first class under the act of April 21, 1949 (P.L.665, No.155),
5known as the First Class City Home Rule Act; or an individual
6serving in such capacity as designated by a home rule charter or
7optional plan pursuant to the act of April 13, 1972 (P.L.184,
8No.62), known as the Home Rule Charter and Optional Plans Law.

9"Claim." Right to payment, whether or not the right is
10reduced to judgment, liquidated, unliquidated, fixed,
11contingent, matured, unmatured, disputed, undisputed, legal,
12equitable, secured or unsecured; or right to an equitable remedy
13for breach of performance if the breach gives rise to a right to
14payment, whether or not the right to an equitable remedy is
15reduced to judgment, fixed, contingent, matured, unmatured,
16disputed, undisputed, secured or unsecured.

17"Commonwealth agency." The Governor and the departments,
18boards, commissions, authorities and other officers and agencies
19of this Commonwealth, whether or not subject to the policy
20supervision and control of the Governor.

21"Creditor." An individual, partnership, corporation,
22association, estate, trust, governmental unit or the governing
23board of a pension fund of a municipality that has a claim
24against a municipality.

25"Deficit." The excess of expenditures over revenues, stated
26as a percentage of revenue, during an accounting period. This
27calculation shall include all governmental fund types and all
28proprietary fund types, but shall exclude all fiduciary fund
29types of the municipality.

30"Department." The Department of Community [Affairs] and
 

1Economic Development of the Commonwealth.

2"Expenditures." Reductions in fund equity, including current
3operating expenses that require the use of fund equity, debt
4service and capital outlays. The term shall not include
5interfund transfers.

6"Fund equity." Excess of assets of a fund over its
7liabilities.

8"Governing body." The council in cities, boroughs and
9incorporated towns; the board of commissioners in counties; the
10board of commissioners in townships of the first class; the
11board of supervisors in townships of the second class; or the
12legislative policy-making body in home rule municipalities.

13"Matured claim." A claim that has been reduced to judgment
14or liquidated in amount by agreement for a period of 90 days
15prior to the filing of a petition to commence fiscal distress
16proceedings under this act.

17"Municipal record." A financial record [and] or document of
18a municipality or of [an authority incorporated by a
19municipality, excluding confidential] an authority or other 
20corporate entity which directly or indirectly performs a 
21governmental function on behalf of the municipality, is directly 
22or indirectly controlled by the municipality or to which the 
23municipality has direct or indirect power of appointment or has 
24directly or indirectly pledged or designated the municipality's 
25revenues or the municipality's credit. The term does not 
26include:

27(1) Confidential information relating to personnel
28matters and matters relating to the initiation and conduct of
29investigations of violations of law. To the extent such 
30information is included in a financial record or document
 

1otherwise subject to this definition, it shall be redacted 
2and the remainder subject to disclosure as otherwise provided 
3by this act.

4(2) A financial record or document in the custody or
5control of an entity other than a municipality, municipal
6authority or other authority, except if the document relates
7to services or governmental functions performed by the
8municipality, municipal authority or on behalf of the
9municipality or municipal authority, or the revenues or
10credit of the municipality or a municipal authority.

11"Municipality." Every county, city, borough, incorporated
12town, township and home rule municipality.

13"Plan" or "recovery plan." A recovery plan developed under
14this act.

15"Revenues." Additions to fund equity other than from
16interfund transfers, proceeds of debt and proceeds of
17disposition of general fixed assets.

18"Secretary." The Secretary of Community [Affairs] and 
19Economic Development of the Commonwealth.

20Section 4. Section 121(a), (b) and (c) of the act are
21amended to read:

22Section 121. Powers and duties of department.

23(a) Compile financial data.--

24(1) A power and duty of the department shall be to
25maintain accurate and current information and data on the
26fiscal status of municipalities to determine if criteria set
27forth in section 201 exist and, if so, whether the existence
28of those factors validly indicates fiscal distress.

29(2) In compiling the information and data, the
30department shall mail, before January 1 of each year, a

1Survey of Financial Condition form to each municipality
2applicable to the municipality's prior fiscal year.

3(i) The survey shall seek information necessary to
4determine the fiscal status of a municipality, shall be
5concise to facilitate prompt response and shall contain
6an attestation clause to be signed by the presiding
7officer of the municipality's governing body. [The actual
8survey form shall not exceed two pages in length.]

9(ii) The survey shall be provided to the municipal
10clerk or municipal secretary along with tax information
11forms in accordance with law.

12(iii) The survey shall include information based on
13the criteria specified in section 201.

14(iv) The survey shall include information relating
15to the basis of accounting utilized by municipalities.

16(b) Assess data.--A power and duty of the department shall
17be to apply the criteria of section 201 to data and information
18on the fiscal status of municipalities to assess the validity
19and applicability of an indication of municipal financial
20distress. In assessing validity and applicability, the
21department shall undertake a review process, including, but not
22limited to, consultation, correspondence and visits with a
23municipality which appears to be financially distressed,
24notwithstanding the provisions of section 2501-C(e) and (f) of
25the act of April 9, 1929 (P.L.177, No.175), known as The
26Administrative Code of 1929, which limits department
27intervention to incidences when such is requested by the
28municipality. If the department [assesses] determines that a
29municipality needs assistance to correct minor fiscal problems,
30the department shall offer appropriate recommendations,
 

1including a recommendation that the municipality submit an 
2application as provided in Chapter 1-A. If the municipality
3adopts those recommendations, the department need take no
4further action.

5(c) Notify agencies of determination.--Upon the making of a
6determination by the secretary that a municipality is distressed
7pursuant to section 203(f), the department shall immediately
8notify the heads of all Commonwealth agencies of the
9determination. The department shall, by January 1 of each year 
10thereafter, notify the heads of all Commonwealth agencies of the
11priority funding requirement for distressed municipalities as 
12provided in section 282.

13* * *

14Section 5. Section 122 of the act is amended by adding a
15subsection to read:

16Section 122. Duties of Commonwealth agencies.

17* * *

18(c) Waiver of certain administrative mandates.--

19(1) Notwithstanding any provision of law and at the
20request of the coordinator or receiver, a Commonwealth agency
21may exempt a distressed municipality from the application of
22a regulatory requirement, if the following conditions are
23satisfied:

24(i) The regulatory requirement is not expressly
25required by Federal law or regulation, or an act of the
26Commonwealth, and is not related to the rights or terms
27and conditions of employment by the municipality.

28(ii) The waiver of the regulatory mandate will not
29likely affect public health and safety.

30(2) It is the intent of this subsection that distressed

1municipalities be considered for relief from regulatory
2mandates that, due to financial distress or the
3implementation of recovery measures, are unduly burdensome on
4the municipality and would not undermine the regulatory
5purposes of the agency if waived.

6Section 6. Sections 123 and 141 of the act, amended July 11,
71996 (P.L.645, No.108), are amended to read:

8Section 123. Powers and duties of municipalities.

9(a) File completed survey.--On or before March 15 of each
10year, every municipality shall return to the department a
11completed Survey of Financial Conditions referred to in section
12121(a). No municipality shall receive its alloted payments
13pursuant to the act of June 1, 1956 (1955 P.L.1944, No.655),
14referred to as the Liquid Fuels Tax Municipal Allocation Law,
15unless it complies with the provisions of this section,
16notwithstanding a provision of law to the contrary, including 
17any provisions which require payment prior to March 15, and the
18Department of Transportation may not disburse funds to a
19municipality pursuant to the Liquid Fuels Tax Municipal
20Allocation Law until notified by the department that the
21municipality has complied with the provisions of this section.

22(b) File applications for grants and loans.--A financially
23distressed municipality may apply to the secretary for emergency
24financial aid in the form of a grant or loan pursuant to Chapter
253.

26(c) Right to petition court for tax increase.--

27(1) After a municipality has adopted a plan under
28[Subchapter C] Subchapters C and C.1 of Chapter 2, it may
29petition the court of common pleas of the county in which the
30municipality is located to increase its rates of taxation for

1earned income of residents and nonresidents, real property,
2or both, beyond maximum rates provided by law.

3(1.1) In addition to the right under paragraph (1), a
4municipality may petition the court to <-increase the rate of a 
5local services tax and levy a payroll preparation tax as
6provided in subsection (d).

7(2) If a tax increase above existing limits is granted
8by the courts or a tax is approved as provided in subsection 
9(d), the increase shall be effective for a period of one
10year. The one-year increase shall run from the date specified
11in the petition filed with the court or, if no such date is
12specified, from the beginning of the current fiscal year of
13the municipality. Subsequent increases in rates of taxation
14or the imposition of a tax under subsection (d) may be
15granted by the court upon annual petition of the municipality
16until the termination date of the plan adopted by the 
17municipality under Chapter 2. The additional amount of taxes
18resulting from the petition shall not be subject to sharing
19with a school district.

20(3) A petition filed by a city of the second class A or 
21a home rule municipality that was previously a city of the 
22second class A under this subsection may not include an
23increase in a [tax<-] rate of taxation on nonresident income 
<-24that is greater than an increase in the rate of taxation, 
25over the highest rate levied in the previous fiscal year, on 
26resident income. A petition shall not include an increase in 
27a rate of taxation on nonresident income unless the
28municipality certifies to the court, with regard to those
29provisions of the plan having a measurable fiscal impact,
30that:

1(i) the municipality has substantially implemented
2the provisions which are within the authority of the
3chief executive officer or governing body, including, but
4not limited to, provisions of the plan that call for
5increasing existing tax rates levied on residents and
6increasing fees charged by the municipality;

7(ii) the municipality has taken those actions
8required to obtain the approval of other parties for
9those provisions which may not be implemented without
10such approval, including, but not limited to, the
11approval of a court, local electors or any collective
12bargaining unit; and

13(iii) the additional income from the aforementioned
14actions is insufficient to balance the municipal budget,
15necessitating additional revenue from an increase in the
16tax on nonresident income.

17(d) Additional tax options and limitations.--After a
18municipality has adopted a plan under Subchapter C or C.1 of
19Chapter 2 and with the approval of the court, it may adopt an
20ordinance imposing <-the following:

21(1) A local services tax pursuant to Chapter 3 of the
22act of December 31, 1965 (P.L.1257, No.511), known as The 
23Local Tax Enabling Act, at a rate not to exceed $156. A 
24municipality adopting an ordinance under this paragraph shall 
25be prohibited from imposing any additional tax on earned 
26income pursuant to subsection (c). A municipality levying the 
27local services tax at a rate in excess of $52 shall, by 
28ordinance, exempt any person from the local services tax 
29whose total earned income and net profits from all sources 
30within the municipality is less than $15,600 for the calendar
 

1year in which the local services tax is levied. This 
2paragraph does not apply to a municipality which, on the 
3effective date of this subsection, is not authorized to 
4petition the court of common pleas for the imposition of an 
5earned income tax on nonresidents.

<-6(2) a payroll preparation tax pursuant to section 303 of
<-7the act of December 31, 1965 (P.L.1257, No.511), known as The
8Local Tax Enabling Act. A municipality imposing a tax under
9this paragraph may levy a tax at a rate as provided in this
10section and as certified by the coordinator and approved by
11the court. When imposing a tax under this paragraph the
12municipality may impose the tax not to exceed a rate that is
13sufficient to produce revenues equal to revenues collected as
14a result of a business privilege tax and a mercantile tax
15under Chapter 3 of The Local Tax Enabling Act in the
16preceding fiscal year. <-After approval by the court of the tax
17at the rate as provided in this section, the municipality may
18levy the tax in any subsequent year without additional court
19approval, including any year after the termination of the
20municipality's distressed status, at a rate not to exceed
21that initially approved by the court. A municipality adopting
22a payroll preparation tax under this paragraph <-shall suspend
23the levy of <-may not levy a business privilege tax or
24mercantile tax <-until expiration of the payroll preparation
25tax authorized under this paragraph at which time the
26municipality may resume its levy of the business privilege
27tax or mercantile tax. The authority provided by this
28paragraph is limited to those municipalities levying a
29business privilege or mercantile tax, on a flat-rate or
30millage basis, in the year of the filing of a petition as

1provided in subsection (c).

<-2(e) Local services tax in municipalities subject to this act
3with distressed pension systems.--

4(1) A financially distressed municipality that has also
5received a determination that it has a financially distressed
6pension system under section 603 of the act of December 18,
71984 (P.L.1005, No.205), known as the Municipal Pension Plan
8Funding Standard and Recovery Act, may adopt an ordinance,
9without court approval, and as recommended in a plan adopted
10under Subchapter C or C.1 of Chapter 2, imposing a local
11services tax pursuant to Chapter 3 of The Local Tax Enabling
12Act at a rate not to exceed $156, or, in a tax year during
13which the income of nonresidents is subject to a tax above
14maximum rates as provided in section 607(f) of the Municipal
15Pension Plan Funding Standard and Recovery Act, a rate not to
16exceed $104. A municipality adopting an ordinance under this
17paragraph shall be prohibited from petitioning the court for
18an increase in the rate of taxation on the income of
19nonresidents under this section. A municipality levying the
20local services tax at a rate in excess of $52 shall, by
21ordinance, exempt any person from the local services tax
22whose total income and net profits from all sources within
23the municipality is less than $15,600 for the calendar year
24in which the local services tax is levied. In addition to the
25uses authorized by section 330 of The Local Tax Enabling Act,
26revenue derived from a rate in excess of $52 may only be used
27for municipal purposes as provided in the plan.

28(2) A municipality that has levied a local services tax
29pursuant to paragraph (1) may continue to levy a local
30services tax at a rate in excess of $52 in accordance with

1paragraph (1) in any subsequent year, provided that a tax
2levied for any year after a termination of distressed status
3shall be authorized subject to all of the following:

4(i) A pension plan of the municipality has unfunded
5actuarial accrued pension liability.

6(ii) All revenue derived from that portion of the
7rate in excess of $52 shall be used solely to defray the
8municipality's unfunded actuarial accrued pension
9liability.

10(iii) The local services tax levied at a rate in
11excess of $52 may not be levied in the same year that the
12income of nonresidents is subject to a tax above maximum
13rates as provided in section 607(f) of the Municipal
14Pension Plan Funding Standard and Recovery Act.

15Section 141. Jurisdiction of court of common pleas.

16(a) Increases in tax rates.--The court of common pleas of
17each county shall have jurisdiction to hear a petition filed by
18a municipality which has adopted a [final] plan pursuant to
19Subchapter C or C.1 of Chapter 2 to increase rates of taxation
20for earned income on residents and nonresidents, real property,
21or both, beyond maximum rates provided by law in accordance with 
22section 123. The court may extend annually the increased taxing
23powers of the municipality until the termination date of the
24plan adopted by the municipality pursuant to Chapter 2.

<-25(a.1) Levy of payroll preparation tax.--The court of common
26pleas of each county shall have jurisdiction to hear a petition
27filed by a municipality which has adopted a plan pursuant to
28Subchapter C or C.1 of Chapter 2 to levy a payroll preparation
29tax authorized by section 123(c)(1.1).

30(a.2) Increase in local services tax.--The court of common

1pleas of each county shall have jurisdiction to hear a petition
2filed by a municipality which has adopted a plan pursuant to
3Subchapter C or C.1 of Chapter 2 to increase the rate of the
4local services tax in accordance with section 123(c)(1.1).

5(b) Involuntary compromises of delinquent taxes.--The court
6of common pleas of each county may hear a petition filed by at
7least two taxing authorities having taxing power over the
8properties within a municipality which has adopted a [final]
9plan pursuant to Subchapter C or C.1 of Chapter 2 if the
10petition requests a compromise of delinquent taxes due on a
11property in that municipality. The court may order the property
12to be sold at a sheriff's sale and the proceeds to be divided
13among all authorities which are owed taxes for the property
14sold. If the property is sold at sheriff's sale and if the
15proceeds are insufficient to satisfy tax liens on the property,
16the court shall order a proration of the sale proceeds among the
17taxing authorities which fixed the liens.

18Section 7. The act is amended by adding a chapter to read:

19CHAPTER 1-A

20EARLY INTERVENTION PROGRAM

21SUBCHAPTER A

22PRELIMINARY PROVISIONS

23Section 101-A. Definitions.

24The following words and phrases when used in this chapter
25shall have the meanings given them in this section unless the
26context clearly indicates otherwise:

27"Center." The Governor's Center for Local Government
28Services of the Department of Community and Economic Development
29of the Commonwealth.

30"Keystone Principles." The Keystone Principles and Criteria

1for Growth Investment and Resource Conservation adopted May 31,
22005, by the Economic Development Cabinet to foster and measure
3the effectiveness of sustainable economic development and
4conservation of resources through the investment of Commonwealth
5funds in its municipalities.

6"Program." The Early Intervention Program established by
7this chapter.

8Section 102-A. Program objectives.

9The Early Intervention Program established by this chapter
10provides a municipality with a preemptive step for the purpose
11of seeking guidance and assistance from the Commonwealth to
12develop long-term financial management, administrative, service
13delivery and economic development strategies that the
14municipality can implement to avert a fiscal crisis and provide
15fiscal stability. The specific objectives of the Early
16Intervention Program include the following and are meant to:

17(1) Provide the resources to assist a municipality in
18identifying, prioritizing and addressing the financial
19difficulties confronting it, while ensuring its short-term
20and long-term goals and objectives are adequately taken into
21account.

22(2) Engage in a management review of its operations and
23provide recommendations that will enhance financial
24administration, management and service delivery of a
25municipality.

26(3) Strengthen the ability of a municipality to develop,
27adopt, implement and monitor multiyear financial management
28plans and to incorporate the process into its annual budget
29process.

30(4) Implement a system of multiyear revenue and

1expenditure trend analysis, monitoring and forecasting so
2that a municipality can better anticipate and plan for future
3financial circumstances.

4(5) Promote multimunicipal and regional planning,
5cooperation strategies and cost-sharing opportunities between
6two or more municipalities.

7(6) Support the adoption by a municipality of best
8management practices and efficiency measures to increase the
9financial stability of a municipality.

10(7) Further the integration of sound community and
11economic development strategies to encourage the economic
12growth of the tax base of a municipality over a multiyear
13period.

14SUBCHAPTER B

15ADMINISTRATIVE PROVISIONS

16Section 103-A. Authorization.

17The Early Intervention Program is established to authorize
18the center to provide guidance and assistance through grants to
19a municipality seeking to ensure fiscal stability by developing
20and implementing long-term financial, managerial and economic
21development strategies.

22Section 104-A. Grants.

23(a) General rule.--A grant may be awarded by the center to a
24municipality or two or more municipalities cooperating together
25to ensure fiscal stability through the development and
26implementation of long-term financial, managerial and economic
27development strategies in an amount not exceeding $200,000
28during the first fiscal year that commences on the effective
29date of this section, adjusted for inflation in subsequent years
30by an amount not to exceed an annual cost-of-living adjustment

1calculated by applying the percentage change in the Consumer
2Price Index immediately prior to the date the adjustment is due
3to take effect. To be eligible for a grant for implementation
4funding, a municipality must meet the basic training
5requirements established in guidelines developed by the center.

6(b) Match.--The grant amount is subject to a 50% financial
7match by the municipality to which the grant was provided,
8unless the center determines a match by the municipality of a
9lesser amount not less than 10% is warranted. The center may
10authorize any portion of the municipality's financial match to
11be offset by an in-kind match.

12(c) Eligible activities.--A grant shall be used for the
13following eligible activities:

14(1) The development of multiyear financial management
15plan for a municipality.

16(2) The development of multimunicipal or regional
17intergovernmental cooperation initiatives and cost-sharing
18strategies.

19(3) A study to improve the management and operational
20practices and financial administration procedures of a
21municipality.

22(4) A merger or consolidation feasibility study.

23(5) The implementation of any of the eligible activities
24identified in paragraphs (1) through (4).

25(6) Training and capacity-building activities that meet
26basic requirements established in guidelines developed by the
27center which assist the municipality in the implementation of
28plan recommendations.

29(7) Contracts with professional consultants to develop
30and implement recommendations related to eligible activities.

<-1(8) An audit, prepared by an independent accountant or
2firm, as required by section 108-A.

3Section 105-A. Application.

4A program application must be submitted by the applicant
5municipality on a form prescribed by the department utilizing
6the electronic single application format and include or
7demonstrate all of the following:

8(1) The name and address of the municipality or, in the
9case of a multimunicipal application, the municipalities.

10(2) The name of a contact person.

11(3) The execution of a supporting resolution authorizing
12the submission of the application and committing the
13resources of the municipality or, in the case of a
14multimunicipal application, municipalities.

15(4) The single application shall be signed by the
16authorized officer of the municipality or, in the case of a
17multimunicipal application, municipalities.

18(5) Any other information required by the department.

19Section 106-A. Evaluation criteria.

20The center shall evaluate a program application on the basis
21of municipal financial characteristics and the quality of the
22proposed program, including the extent to which the program is
23estimated to improve the administrative, operational and
24financial management capacity of the applicant municipality. The
25following factors shall be considered in the evaluation:

26(1) The current and projected financial condition of the
27municipality.

28(2) The economic and demographic condition of the
29municipality.

30(3) The proactive measures the municipality has taken to

1manage its finances in a responsible manner, including
2attempts to reduce expenditures, increase revenues, adopt
3sound management practices, establish municipal priorities
4and adhere to generally accepted financial management, budget
5and financial reporting standards.

6(4) The extent to which the municipality has
7demonstrated its willingness and commitment to engage in a
8multimunicipal or regional strategy and has examined whether
9certain municipal services can be provided through a council
10of governments, a county government or other structure.

11(5) The extent to which the municipality has
12demonstrated its willingness and commitment to improve its
13financial and administrative operation through the adoption
14and implementation of a multiyear financial management plan.

15(6) Where it has received assistance and funding from
16the department, past performance by the municipality.

17(7) Where applicable, the elements of the Keystone
18Principles shall be included as part of the evaluation
19criteria.

20(8) Any other factors the center considers relevant.

21Section 107-A. Award.

22The secretary shall announce by letter applications selected
23for funding. The contact person specified in the application
24shall be sent the offer letter. All funding decisions shall be
25made subject to the availability of funds.

26Section 108-A. Guidelines.

27The department shall establish guidelines consistent with
28this chapter, particularly the program requirements and
29measurements to ensure a municipality is provided with adequate
30guidance. The program shall include a requirement of a financial

1audit of the municipality, prepared by an independent accountant
2or firm, for the fiscal year immediately preceding the
3application for funds under this chapter. The department may
4establish guidelines for the audit, and the requirement may be
5satisfied by any previous audit prepared in accordance with the
6guidelines.

7Section 8. Section 203(c) and (g) of the act, amended June
830, 1992 (P.L.336, No.69), are amended to read:

9Section 203. Procedure for determination.

10* * *

11(c) Investigation.--After receiving the request but before
12the public hearing, the secretary may make an investigation into
13the financial affairs of the municipality. The results of the
14investigation or any study previously conducted by the
15department <-or with department funds under Chapter 1-A or section
16121 shall be placed in the record of the public hearing.

17* * *

18(g) Appeal.--A determination by the secretary under this 
19[act] section is appealable pursuant to [Title 2 of the 
20Pennsylvania Consolidated Statutes (relating to administrative 
21law and procedure)] 2 Pa.C.S. Ch. 7 Subch. A (relating to 
22judicial review of Commonwealth agency action).

23Section 9. Sections 221(d) and (e), 222 and 223 of the act
24are amended to read:

25Section 221. Designation.

26* * *

27(d) Duties.--The coordinator shall [prepare and administer a
28plan designed to relieve the financial distress of the
29municipality which he has been appointed to serve.]:

30(1) Present, at a public meeting within 45 days of the

1execution of the contract between the department and the
2coordinator, a list of the coordinator's preliminary
3findings, as to the financial condition of municipality. The
4list of findings shall include, but is not limited to, a
5quantification of all operating deficits for the current
6fiscal year and a projection of revenues and operating
7expenses for the next three fiscal years, all outstanding
8debt obligations, the cost and term of all outstanding
9contracts, and other relevant information.

10(2) Solicit, not later than the date of the
11coordinator's presentation described in paragraph (1),
12comments <-in writing relating to the issues associated with
13the municipality's distress from such persons and entities
14who:

15(i) have participated in the early intervention
16process;

17(ii) have provided consultation on behalf of the
18municipality relating to the issues associated with its
19distress; or

20(iii) are elected officials or employees of the
21municipality or labor organizations representing
22employees of the municipality.

23(3) Consider all comments submitted within 30 days of
24the coordinator's presentation described in paragraph (1)
25before preparing and administering a plan designed to relieve
26the financial distress of the municipality which the
27coordinator has been appointed to serve.

28(e) Powers.--The coordinator may [apply]:

29(1) Apply for grants and loans pursuant to Chapter 3, as
30[he] the coordinator deems necessary.

1(2) Investigate the tax-exempt status of any property
2within a distressed municipality and advise the governing
3body of the municipality to appeal the assessment or exempt
4status of property within the distressed municipality.

5(3) Solicit and negotiate payments in lieu of taxes from
6institutions of public charity and other tax-exempt property
7owners in the municipality <-and recommend action by the 
8municipality.

9Section 222. Access to information.

10(a) General rule.--The coordinator shall have full access to
11all municipal records.

12(b) Enforcement where records in possession of official or 
13public employee.--If the coordinator believes that an official
14or employee of the municipality or an authority is not answering
15questions accurately or completely or is not furnishing
16information requested, the coordinator may notify the official
17or employee in writing to furnish answers to questions or to
18furnish documents or records, or both. If the official or
19employee refuses, the coordinator may seek a subpoena in the
20court of common pleas to compel testimony and furnish records
21and documents. An action in mandamus shall lie to enforce the
22provisions of this section.

23(c) Enforcement where records in possession of other
24persons.--If the coordinator believes that a person is not
25furnishing information related to municipal records and that
26person is not subject to subsection (b), the coordinator may
27seek a subpoena in the court of common pleas to compel testimony
28and furnish records and documents.

29Section 223. Public and private meetings.

30(a) Public meetings authorized.--The coordinator may hold

1public meetings as defined in [the act of July 3, 1986 (P.L.388, 
2No.84), known as the Sunshine Act] 65 Pa.C.S. Ch. 7 (relating to 
3open meetings), in connection with plan preparation.

4(b) Private meetings authorized.--Notwithstanding the
5provisions of [the Sunshine Act] 65 Pa.C.S. Ch. 7, private
6negotiation sessions may be conducted by the coordinator between
7the municipality and the individual creditors in an effort to
8obtain the consent of each creditor to the proposed adjustment
9and handling of specific claims against the municipality.

10Section 10. The act is amended by adding a section to read:

11Section 224.1. Performance of coordinator.

12(a) Review of coordinator.--Beginning on July 1, 2015, the
13secretary, or his designee, shall conduct an annual review of
14each coordinator appointed under section 221 to assess whether
15the coordinator's performance has been in compliance with the
16requirements of the coordinator's contract, if any, and the
17provisions of this act.

18(b) Termination of coordinator.--An unfavorable review under
19this section may constitute grounds for termination of the
20coordinator's contract for cause.

21Section 11. Section 241 of the act, amended or added June
2230, 1992 (P.L.336, No. 69) and July 5, 2012 (P.L.1104, No.133)
23and repealed in part October 13, 1994 (P.L.596, No.90), is
24amended to read:

25Section 241. Contents.

26A plan formulated by the appointed coordinator shall be
27consistent with applicable law and shall include any of the
28following factors which are relevant to alleviating the
29financially distressed status of the municipality:

30(1) Projections of revenues and expenditures for the

1current year and the next [three] five years, both assuming
2the continuation of present operations and as impacted by the
3measures in the plan. The projections must include an 
4itemization of the following:

5(i) Projected revenues, including:

6(A) Local taxes.

7(B) Licenses, permits and fines.

8(C) Sales and rentals.

9(D) Federal, State and county grants and loans.

10(E) Any other sources of projected revenue.

11(ii) Projected expenditures, including:

12(A) Debt service.

13(B) Workforce.

14(C) Elected and executive officials.

15(D) Financial management.

16(E) Infrastructure costs, including highways,
17roads and wastewater systems.

18(F) Maintenance costs, including recycling and
19trash collection, disposal and removal.

20(G) Other professional services.

21(H) Public safety.

22(I) Community and economic development.

23(J) Any other applicable expenditures.

24(2) Recommendations which will:

25(i) Satisfy judgments, past due accounts payable,
26and past due and payable payroll and fringe benefits.

27(ii) Eliminate deficits and deficit funds.

28(iii) Restore to special fund accounts money from
29those accounts that was used for purposes other than
30those specifically authorized.

1(iv) Balance the budget, avoid future deficits in
2funds and maintain current payments of payroll, [fringe]
3benefits and accounts through possible revenue
4enhancement recommendations, including tax or fee
5changes.

6(v) Avoid a fiscal emergency condition in the
7future.

8(vi) Enhance the ability of the municipality to
9negotiate new general obligation bonds, lease rental
10debt, funded debt and tax and revenue anticipation
11borrowing.

12(vii) Consider changes in accounting and automation
13procedures for the financial benefit of the municipality.

14(viii) Propose a reduction of debt due on specific
15claims by an amortized or lump-sum payment considered to
16be the most reasonable disposition of each claim possible
17for the municipality considering the totality of
18circumstances.

19(3) Possible changes in collective bargaining agreements
20and permanent and temporary staffing level changes or changes
21in organization.

22(4) Recommended changes in municipal ordinances or
23rules.

24(5) Recommendations for special audits or further
25studies.

26(6) An analysis of whether conditions set forth in
27section 261 exist, whether specific exclusive Federal
28remedies could help relieve the municipality's financial
29distress and whether filing a Federal debt adjustment action
30under Subchapter D is deemed to be appropriate.

1[(7) An analysis of whether the economic conditions of
2the municipality are so severe that it is reasonable to
3conclude that the municipality is no longer viable and should
4consolidate or merge with an adjacent municipality or
5municipalities.]

6(7.1) An analysis of whether the economic conditions
7within the municipality are so severe that it is no longer
8viable and should consolidate or merge with an adjacent
9municipality or municipalities in accordance with 53 Pa.C.S.
10Ch. 7 (relating to alteration of territory or corporate
11entity and dissolution) or disincorporate in accordance with
12Chapter 4.

13(8) An analysis of whether functional consolidation of
14or privatization of existing municipal services is
15appropriate and feasible and recommendations for where and
16how this could be done.

17(9) A capital budget which addresses infrastructure
18deficiencies.

19(10) Recommendations for greater use of Commonwealth
20economic and community development programs.

21(10.1) Recommendations for enhanced cooperation and
22changes in land use planning and zoning, including regional
23approaches that would promote economic development and
24improve residential, commercial and industrial use
25availability within and around the municipality.

26(11) Notwithstanding any other provision of law, limits
27on projected expenditures for individual collective
28bargaining units that may not be exceeded by the distressed
29municipality, giving due consideration to the projection of
30revenue and expenses under paragraph (1).

1(12) An analysis of current revenue sources and
2recommendation to modify revenue sources, including the
3subjects and rates of taxation of the distressed municipality
4in accordance with section 123. Recommendations relating to a
5modification of revenue sources shall be made with
6consideration to the effect on economic development,
7employment and an equitable distribution of tax burden. The
8analysis and recommendations shall be presented to the court
9in any proceeding under section 123. The analysis shall
10address:

11(i) The tax bases of current and recommended revenue
12sources from both within and outside of the distressed
13municipality.

14(ii) Collection rates, methods and costs of existing
15and, to the extent possible, proposed revenue sources<-,
16including code enforcement and tax collection.

17(iii) The current fee, charge, penalty and fine
18provisions of municipal enactments related to municipal
19services and police powers.

20(iv) Revenue as defined in section 103.

21Section 12. Section 242(a) of the act, amended December 19,
221988 (P.L.1272, No.157), is amended and the section is amended
23by adding a subsection to read:

24Section 242. Publication.

25(a) Filing.--Within [90] 120 days of an executed contract
26between the department and the coordinator, the coordinator
27shall formulate a plan for relieving the municipality's
28financial distress and shall deliver true and correct copies of
29it to:

30(1) The municipal clerk or municipal secretary, who

1shall immediately place the copy on file for public
2inspection in the municipal office.

3(2) The secretary.

4(3) Each member of the municipal governing body.

5(4) The mayor.

6(5) The chief financial officer of the municipality.

7(6) The solicitor of the municipal governing body.

8(7) All parties who have petitioned the secretary under
9section 203.

10* * *

11(c.1) Solicitation of comments.--The coordinator shall, no
12later than the date of filing, solicit comments on the
13coordinator's plan to be presented at the public meeting from
14such persons and entities which submitted timely comments under
15section 221(d)(2).

16* * *

17Section 13. Section 245 of the act, amended December 19,
181988 (P.L.1272, No.157), is amended to read:

19Section 245. Adoption by municipality.

20Not later than 25 days following the coordinator's public
21meeting, the municipal governing body shall either enact an
22ordinance approving the implementation of the plan, including
23enactment of necessary related ordinances and revisions to
24ordinances, or shall reject the plan and proceed under section
25246. If the ordinance takes effect in a municipality operating
26under an optional plan form of government or a home rule
27charter, the chief executive officer [may] shall issue an order
28directing the implementation of the plan no later than seven
29days from the enactment of the ordinance by the governing body.

30Section 14. Section 246(d)(3) of the act is amended to read:

1Section 246. Preparation and action on alternate plan.

2* * *

3(d) Review by secretary.--

4* * *

5(3) If the secretary is of the opinion that the plan,
6when implemented, will not overcome the municipality's
7financial problems, the secretary shall inform the
8municipality of the following:

9(i) The secretary's determination.

10(ii) The reasons for the determination.

11(iii) The applicability of sections 251 and 264 to
12the municipality.

13(iv) The applicability of Chapters 6 and 7 to the
14municipality.

15Section 15. Section 247(a)(4) of the act, amended June 30,
161992 (P.L.336, No.69), is amended to read:

17Section 247. Plan implementation.

18(a) Coordinator's plan.--If the coordinator's plan is
19adopted by the municipal governing body, the coordinator shall
20be charged with implementing his plan and shall:

21* * *

22(4) Terminate the plan upon its completion in accordance 
23with Subchapter C.1.

24* * *

25Section 16. The act is amended by adding a section to read:

26Section 247.1. Annual budget.

27(a) Proposed budget.--Notwithstanding any provision of law
28or home rule charter to the contrary, a municipality subject to
29a plan under this chapter shall, at least <-150 120 days prior to
30the end of its current fiscal year, commence development of a

1proposed annual budget for the next fiscal year that implements
2the provisions of the plan or makes other changes to the
3management of the municipality necessary to implement the
4provisions of the plan. The proposed budget shall be prepared by
5the governing body or the chief executive officer, as the case
6may be.

7(b) Coordinator review.--At least <-90 75 days prior to the
8end of the fiscal year, the governing body or chief executive
9officer shall submit the proposed budget to the coordinator. The
10coordinator shall review the proposed budget to verify that the
11proposed budget conforms with the plan. The coordinator shall
12make any modifications necessary to the proposed budget to meet
13the objectives of the plan.

14(c) Return of proposed budget.--After completion of the
15coordinator's review, the coordinator shall, at least 45 days
16before the end of the municipality's fiscal year, submit the
17proposed budget, together with the coordinator's modifications,
18if any, to the municipality for adoption in accordance with law.

19(d) Notification to secretary.--Within 30 days of the
20municipality's adoption of the budget, or the municipality's
21failure to timely adopt a budget, the coordinator shall notify
22the secretary whether or not the adopted budget, if any,
23conforms to the plan. Upon a determination that the budget does
24not conform to the plan, or that the municipality has not timely
25adopted a budget, the secretary may take action as provided for
26by this act.

27Section 17. Sections 248 and 250 of the act are amended to
28read:

29Section 248. Failure to adopt or implement plan.

30If no plan is adopted or implemented pursuant to this

1chapter, then sections 251 and 264 shall apply[.] and, upon a 
2written recommendation of the coordinator, the secretary may 
3request a determination of a fiscal emergency in accordance with 
4Chapter 6.

5Section 250. Debt provisions.

6Adoption of a plan in accordance with this subchapter and 
7Subchapter C.1 by ordinance is a condition precedent for the
8approval of long-term debt or funding debt under [the act of
9July 12, 1972 (P.L.781, No.185), known as the Local Government
10Unit Debt Act] 53 Pa.C.S. Pt. VII Subpt. B (relating to 
11indebtedness and borrowing). A debt financing provision of the
12plan may be waived by agreement of the lender and the
13municipality; but any such waiving must be expressly set forth
14in the indenture or contract securing the debt.

15Section 18. Section 253 of the act is repealed:

16[Section 253. Termination of status.

17(a) Determination by secretary.--Following a duly advertised
18public hearing with notices given as provided in section 203,
19the secretary may issue a determination that the conditions
20which led to the earlier determination of municipal financial
21distress are no longer present. The determination shall rescind
22the status of municipal financial distress and shall include a
23statement of facts as part of the final order.

24(b) Determination upon petition by a municipality.--A
25financially distressed municipality may petition the secretary
26to make a determination that the conditions which led to the
27earlier determination of municipal financial distress are no
28longer present. Upon receiving the petition, the secretary may
29issue a determination to rescind following a duly advertised
30public hearing with notices given as provided in section 203.

1(c) Factors to consider.--In determining whether the
2conditions which led to the earlier determination of municipal
3financial distress are no longer present, the secretary shall
4consider that:

5(1) Monthly reports submitted by the coordinator to the
6department under section 247(a)(3) indicate that termination
7of the status of municipal financial distress is appropriate.

8(2) Accrued deficits in the municipality have been
9eliminated.

10(3) Obligations issued to finance all or part of the
11municipality's deficit have been retired.

12(4) The municipality has operated, for a period of at
13least one year, under a positive current operating fund
14balance or equity, as evidenced by the municipality's audited
15financial statements prepared in accordance with generally
16accepted accounting principles.]

17Section 19. The act is amended by adding a subchapter to
18read:

19SUBCHAPTER C.1

20DURATION OF DISTRESSED STATUS

21Section 254. Limitation of status.

22(a) Termination date.--

23(1) Except as otherwise provided in this subchapter, no
24municipality shall be subject to the provisions of this act
25after five years from the effective date of an ordinance
26enacted in accordance with section 245 or 246. No amendment
27to a plan shall affect the termination date as determined
28from the date of enactment of the original ordinance.

29(2) Nothing in this section shall be construed to:

30(i) prohibit a municipality from participating in an

1early intervention program as provided in Chapter 1-A or
2reentering distressed status in accordance with this act
3after a termination of status in accordance with this
4subchapter.

5(ii) Prohibit termination of status proceedings in
6accordance with section 255.1 prior to the termination
7date as provided in this section.

8(b) Distressed municipalities.--

9(1) Municipalities operating pursuant to a recovery plan
10on the effective date of this section shall be subject to a
11termination date five years from the effective date of the
12most recent recovery plan or amendment enacted in accordance
13with this act, provided, however, that municipalities subject
14to a plan that will remain in effect for one year or less on
15the effective date of this subsection shall be subject to a
16termination date three years from the termination date of the
17current plan or plan amendment.

18(2) If its distressed status has not been rescinded or
19has been continued in accordance with section 710.1, a
20municipality operating under Chapter 7 shall be subject to a
21final termination date no more than five years from the
22termination date of receivership. Section 255 shall not apply
23to a termination of status under this paragraph.

24Section 255. Coordinator's report.

25(a) General rule.--Not later than 180 days after the
26beginning of the final year of distressed status as determined
27in accordance with section 254(a) and (b)(1), the coordinator
28shall <-prepare complete a report stating the financial condition
29of the municipality and include one of the following findings:

30(1) Conditions within the municipality warrant a

1termination in status in accordance with section 255.1. A
2report containing a recommendation under this paragraph shall
3address each of the factors set forth in section 255.1(c).

4(2) Conditions are such that the municipality should be
5disincorporated in accordance with Chapter 4.

6(3) Conditions are such that the secretary should
7request a determination of a fiscal emergency in accordance
8with Chapter 6.

9(4) A three-year exit plan in accordance with section
10256 is warranted.

11(b) Filing and notice.--

12(1) The report shall be filed with the same parties as
13provided in section 242(a). The date of filing shall be the
14date on which the municipal clerk or municipal secretary
15places a true and correct copy of the report on file for
16public inspection in the municipal office.

17(2) On the date of filing, notice that the report has
18been filed and is open for public inspection in the municipal
19office shall be published by the coordinator in the county
20legal reporter and in one or more newspapers with general
21circulation serving the area in which the municipality is
22located. The department shall pay for the cost of the
23publication of the notice. The notice shall contain the
24following information:

25(i) A statement that a report regarding the status
26of the municipality's financial distress was filed
27pursuant to this act.

28(ii) The date and place of filing.

29(iii) A statement that the public has 15 days from
30the date of filing in which to file written comments on

1the report.

2(iv) The name and address of the coordinator to whom
3written comments should be sent.

4(v) A summary of the report and findings of the
5coordinator.

6(vi) The date and place of a public meeting to
7receive comments on the report.

8(c) Written comments.--Written comments on the report may be
9filed with the coordinator. Written comments shall be made no
10later than 15 days after the date of filing. Written comments
11judged by the coordinator to have value to the plan may be used
12to develop a revised report.

13(d) Public meeting.--A meeting conducted by the coordinator
14in the municipality shall be set for a date not later than 20
15days after the date of filing the report. The coordinator shall
16request in writing that the chief executive officer, each member
17of the municipal governing body and the chief financial officer
18of the municipality be present at the coordinator's meeting.
19Comments on the plan shall be received by the coordinator at
20that time. The coordinator has the discretion whether to
21consider comments made on the report.

22(e) Revision of report.--

23(1) Nothing in this section shall be construed to
24preclude the coordinator from revising a report of his own
25initiative.

26(2) Neither the secretary nor the chief executive
27officer or the governing body, as appropriate, may revise the
28coordinator's report.

29(3) If the coordinator decides to revise the report, the
30coordinator shall consult with the secretary and either the

1chief executive officer or the governing body throughout the
2revision of the report and shall give consideration to
3comments they may propose.

4(4) A revised report shall be completed and delivered to
5each party cited in section 242(a) within ten days from the
6date of the coordinator's public meeting on the original
7report.

8Section 255.1. Termination of status.

9(a) Public hearing.--Within 30 days of the date for the
10filing of a final report containing a finding as provided in
11section 255(a)(1) the secretary shall conduct a public hearing,
12advertised with notices given as provided in section 203.

13(b) Determination.--Within 90 days of the conclusion of the
14public hearing, the secretary shall issue an administrative
15determination of whether the termination of status is
16appropriate and reasons for the determination. The determination
17shall include findings addressing each of the factors in
18subsection (c) and shall consider information provided in the
19report of the coordinator and any additional information
20received during the public hearing.

21(c) Factors to consider.--If the secretary concludes that
22substantial evidence supports an affirmative determination for
23each of the following factors, the determination shall be that
24distressed status will be rescinded. The secretary shall
25consider whether:

26(1) Operational deficits of the municipality have been
27eliminated and the financial condition of the municipality,
28as evidenced by audited financial statements prepared in
29accordance with generally accepted accounting principles and
30projections of future revenues and expenditures, demonstrates

1a reasonable probability of future balanced budgets absent
2participation in this act.

3(2) Obligations issued to finance the municipality's
4debt have been retired, reduced or reissued in a manner that
5has adequately refinanced outstanding principle and interest
6and has permitted timely debt service and reasonable
7probability of continued timely debt service absent
8participation in this act.

9(3) The municipality has negotiated and resolved all
10claims or judgments that would have placed the municipality
11in imminent jeopardy of financial default.

12(4) The reasonably projected revenues of the
13municipality are sufficient to fund ongoing necessary
14expenditures, including pension <-and debt obligations and the
15continuation or negotiation of collective bargaining
16agreements and the provision of municipal services.
17Projections of revenues shall include any anticipated tax or
18fee increases to fund ongoing expenditures for the first five
19years after a termination of distressed status.

20(d) Appeal.--<-A labor organization that is a party to a
21collective bargaining agreement with a financially distressed
22municipality and any other party withstanding under section 202
23may appeal the The determination of the secretary <-may be
24appealed pursuant to 2 Pa.C.S. Ch. 7 Subch. A (relating to
25judicial review of Commonwealth agency action)<-. by any of the
26following:

27(1) The governing body of the municipality.

28(2) A creditor of the municipality.

29(3) Ten percent of the number of electors of the
30municipality that voted at the last municipal election.

1(4) Ten percent of the beneficiaries of a pension fund
2of the municipality.

3(5) Ten percent of the employees of the municipality.

4(6) Trustees or paying agents of a municipal bond
5indenture.

6(7) Elected auditors, elected controllers or appointed
7independent auditors.

8(8) A trustee of the Municipal Pension Fund.

9(9) The chief executive officer of any city.

10(10) A labor organization that is a party to a
11collective bargaining agreement with the municipality.

12(e) Suspension of subsequent proceedings.--The coordinator
13and secretary shall not take any action under sections 256 and
14257 until a final decision is issued for any appeal under
15subsection (d) or (f). The duration of distressed status of the
16municipality shall be extended subject to subsequent action in
17accordance with section 257.

18(f) Action of the secretary preserved.--Except as otherwise
19provided in chapters 6 and 7, the secretary may, following a
20duly advertised public hearing with notices given as provided in
21section 203, at any time issue a determination as provided in
22this section upon written recommendation of the coordinator
23setting forth a discussion of each of the factors specified in
24subsection (c). The determination may be appealed in accordance
25with subsection (d).

26Section 256. Exit plan.

27(a) General rule.--If recommended in a final report under
28section 255, the coordinator shall within 90 days of the public
29meeting referred to in section 255 <-or the filing of the final 
30report under section 255(e)(4), whichever is later, prepare an

1exit plan for the municipality. The exit plan shall be subject
2to the same filing, notice, public meeting and revision
3procedures as specified in section 255.

4(b) Contents of exit plan.--The exit plan prepared by the
5coordinator shall contain such elements as may be necessary to
6ensure termination of distressed status after three years,
7including, but not limited to:

8(1) The sale, lease, conveyance, assignment or other use
9or disposition of the assets of the distressed municipality.

10(2) Functional consolidation of or privatization of
11existing municipal services.

12(3) The execution, approval, modification, rejection,
13renegotiation or termination of contracts or agreements of
14the distressed municipality, provided, however, that the
15provisions of section 252 shall apply to any exit plan
16adopted in accordance with this subchapter.

17(4) Changes in the form of municipal government or the
18configuration of elected or appointed municipal officials and
19employees as permitted by law.

20(c) Adoption of plan.--

21(1) Not later than 45 days following the coordinator's
22public meeting <-to hear comments on the exit plan, the
23municipal governing body shall enact an ordinance approving
24the implementation of the plan, including enactment of
25necessary related ordinances and revisions to ordinances.

26(2) If the ordinance takes effect in a municipality
27operating under an optional plan form of government or a home
28rule charter, the chief executive officer shall issue an
29order directing the implementation of the plan no later than
30seven days from the enactment of the ordinance by the

1governing body.

2(3) If the governing body fails to adopt and implement
3the plan, the secretary shall, upon a written determination
4by the coordinator, request that the Governor make a
5determination of a fiscal emergency in accordance with
6Chapter 6.

7(4) The requirements of this subsection shall be
8suspended if the coordinator first provides a recommendation
9to the secretary that the municipality should be
10disincorporated under Chapter 4.

11Section 257. Postreport procedures.

12(a) Five-year procedures.--The secretary shall, upon written
13recommendation from the coordinator and after filing a final
14report under section 255, take one of the following actions:

15(1) Terminate the distressed status of the municipality
16effective 90 days after a determination or final decision
17requiring termination of status as provided in section 255.1.

18(2) After filing a final report containing a
19recommendation under section 255(a)(2), terminate the
20distressed status of the municipality effective on the date
21of a final order establishing an unincorporated district
22under Chapter 4.

23(3) After filing a final report containing a
24recommendation under section 255(a)(3), request a
25determination of a fiscal emergency in accordance with
26Chapter 6.

27(b) Exit plan procedures.--The secretary may, after the
28adoption of a plan under section 256(c) and upon written
29recommendation of the coordinator:

30(1) issue a determination in accordance with section

1255.1; or

2(2) request a determination of a fiscal emergency in
3accordance with Chapter 6.

4(c) Postexit plan procedures.--If three years have elapsed
5since the adoption of an exit plan without a recommendation as
6provided in subsection (b), the secretary shall terminate the
7distressed status of the municipality.

8Section 20. Section 261(a)(4) of the act, amended July 5, 
92012 (P.L.1104, No.133), is amended and the section is amended 
10by adding a subsection to read:

11Section 261. Filing municipal debt adjustment under Federal
12law.

13(a) [Authorization.--In the event one of the following
14conditions is present, a] General authorization.--A municipality
15is hereby authorized to apply to the department to file a
16municipal debt adjustment action pursuant to the Bankruptcy Code
17(11 U.S.C. § 101 et seq.), if at least one of the following 
18conditions is present:

19* * *

20[(4) A majority of the current or immediately preceding
21governing body of a municipality determined to be financially
22distressed has failed to adopt a plan or to carry out the
23recommendations of the coordinator pursuant to this act.]

24(a.1) Filing after determination of distress.--The
25municipality's authorization under subsection (a) shall continue
26after the issuance of a declaration of distress under section
27203, so long as the municipality is not in a state of fiscal
28emergency pursuant to a declaration under section 602. A
29municipality that is in a state of fiscal emergency shall not be
30authorized under subsection (a) to apply to the department to

1file a municipal debt adjustment.

2* * *

3Section 21. Section 281 of the act, added June 30, 1992
4(P.L.336, No.69), is amended to read:

5Section 281. Eligibility.

6If a municipality has been determined to be distressed under
7section 203(f) and is not subject to funding restrictions under
8section 251 or 264, it shall be eligible for economic and
9community development assistance as provided in section 282.
10Merger or consolidation [under Chapter 4] of a distressed
11municipality with a municipality may not be deemed to diminish
12the successor municipality's eligibility or priority status for
13economic assistance under this chapter.

14Section 22. Section 282(b) of the act, added June 30, 1992
15(P.L.336, No.69), is amended and the section is amended by
16adding a subsection to read:

17Section 282. Priority.

18* * *

19(b) Releases of funds.--Funds granted to a distressed
20municipality shall only be released upon concurrence by the
21coordinator or receiver that the program to be funded is
22consistent with efforts to alleviate the financially distressed
23status of the municipality as provided in this act.

24(b.1) Release of funds to unincorporated district.--Funds
25granted to an unincorporated district shall be released to the
26administrator in accordance with section 441.

27* * *

28Section 23. Chapter 4 heading of the act is amended to read:

29CHAPTER 4

30[CONSOLIDATION OR MERGER OF] ECONOMICALLY NONVIABLE

1MUNICIPALITIES

2Section 24. Chapter 4 of the act is amended by adding
3subchapters to read:

4SUBCHAPTER C

5DISINCORPORATION OF NONVIABLE MUNICIPALITIES

6Section 431. Definitions

7The following words and phrases when used in this subchapter
8shall have the meanings given to them in this section unless the
9context clearly indicates otherwise:

10"Administrator." A service district administrator appointed
11pursuant to section 434.

12"District." An unincorporated service district created by
13section 441.

14"District advisory committee." A service district advisory
15committee established by section 442.

16"Governing standards." Provisions within an essential
17services plan providing for certain conduct of residents and
18property owners as provided by section 436(c).

19"Municipality." A county, city, borough, incorporated town,
20township or home rule municipality that does not provide police
21service or fire service through its employees. The term does not
22include a city of the first class.

23"Restricted Account." An account established in the State
24Treasury as provided by section 445.1.

25Section 431.1. Determination of nonviability.

26(a) General rule.--Upon recommendation of a coordinator
27appointed under Chapter 2 or a receiver appointed under Chapter
287, the secretary shall consider whether all of the following
29conditions have been met in determining that a municipality is
30nonviable:

1(1) The municipality is unable to function as a general
2purpose unit of government to provide essential services to
3its residents and property owners.

4(2) The municipality has experienced such deteriorated
5economic conditions and a collapse of its tax base that all
6reasonable efforts to restore economic viability have failed.

7(3) Efforts to merge or consolidate the municipality
8with a neighboring municipality are unachievable or will not
9result in viability.

10(b) Notice and recommendation.--If the secretary determines
11that a municipality is nonviable under all of the conditions
12provided in subsection (a), the secretary shall provide notice
13to the governing body of the municipality of the secretary's
14determination and recommend that the municipality be
15disincorporated under this subchapter.

16Section 432. Procedure for disincorporation.

17(a) Ordinance.--Within 45 days of a determination of
18nonviability under section 431.1, the governing body may enact
19an ordinance, subject to review by the court of common pleas
20under section 433, that will initiate the disincorporation of
21the municipality. The ordinance shall be advertised as required
22by law but it may not become effective until the court has
23issued its decree under section 433.

24(b) Petition by electors.--If the governing body of the
25municipality fails to pass an ordinance authorized under
26subsection (a), then a petition signed by registered electors of
27the municipality comprising at least 51% of the number of
28electors voting for the office of Governor in the last
29gubernatorial general election may be submitted to the court
30within 60 days of the failure of the governing body to enact an

1ordinance as provided in subsection (a).

2Section 433. Judicial review of ordinance or petition.

3(a) Filing and notice.--Upon presentation to the court of
4the filing of an ordinance under section 432(a) or a petition
5under section 432(b), the court shall direct the prothonotary to
6give notice of the filing of the ordinance or petition in a
7newspaper of general circulation in the county where the
8municipality is located once a week for four consecutive weeks
9and once in the county legal journal, if any, during the four-
10week period. The notice shall provide the date the ordinance or
11petition was filed and specify that exceptions to the ordinance
12or petition may be filed within 45 days of the date of the
13filing of the ordinance or petition by any of the following:

14(1) the governing body of the municipality;

15(2) a taxpayer of the municipality;

16(3) any creditor or bondholder of the municipality; or

17(4) any collective bargaining unit or contractor of the
18municipality.

19(b) Notice of hearing.--No later than 60 days after the date
20of the filing of the ordinance or petition, the court shall
21conduct a hearing on the ordinance or petition and exceptions
22filed thereto. Notice of the hearing shall be provided by the
23court to those receiving notice under subsection (a) and to all
24other parties that have filed exceptions in accordance with
25subsection (a).

26(c) Hearing proceedings.--

27(1) The governing body of the municipality and all other
28individuals and entities which have filed exceptions under
29subsection (a) shall be parties to the proceedings and shall
30be entitled to present testimony or other evidence relevant

1to the nonviability of the municipality or relevant to
2exceptions timely filed, provided that the court, in its
3discretion, may consolidate testimony related to similar
4exceptions.

5(2) The coordinator or receiver, or another designee of
6the secretary, shall testify about the progress of the
7municipality under the adopted recovery plan under Chapter 2
8or plan adopted under Chapter 7 and render an opinion
9regarding the viability of the municipality.

10(3) The court may examine pertinent financial
11information and any audits prepared by a certified public
12accountant of the municipality and receive additional
13evidence relevant to the matter, including, but not limited
14to, evidence relating to:

15(i) The effect of disincorporation, including
16provisions for services that would be continued to be
17provided to residents and property owners of the proposed
18disincorporated area.

19(ii) Additional plans, proceedings or strategies
20that could ensure that the municipality remain viable.

21(iii) The effect of the disincorporation on any
22bonds, other obligations or agreements of the
23municipality.

24(d) Costs and fees.--Court costs and filing fees associated
25with proceedings under this subchapter shall be paid by the
26department.

27(e) Judicial decree.--

28(1) The court shall issue a decree approving the
29validity of the ordinance or granting the petition unless it
30finds, by clear and convincing evidence, that the

1municipality should continue to exist as a separate municipal
2corporation because of a reasonable expectation that the
3municipality is viable.

4(2) Upon issuance of the judicial decree, the department
5and governing body of the municipality shall engage in the
6duties required by this subchapter to prepare for
7disincorporation. The disincorporation shall take effect upon
8the execution of disincorporation under section 439.

9Section 433.1. Failure to initiate disincorporation.

10(a) Conditions prior to determination.--The secretary shall
11issue a determination under subsection (b) within 30 days of
12either:

13(1) the final day for filing a petition under section
14432(b), if judicial review under section 433 has not been
15initiated; or

16(2) a final adjudication pursuant to a hearing held
17under section 433 finding that the municipality should
18continue to exist as a separate municipal corporation because
19of a reasonable expectation that the municipality is viable.

20(b) Determination.--The secretary shall determine whether:

21(1) the recovery plan for the municipality shall remain
22in effect subject to the limitations of chapter 2, subchapter
23C.1 and, if the coordinator has previously issued a report
24pursuant to section 255, the secretary shall direct the
25coordinator to prepare an exit plan according to section 256;

26(2) the elected and appointed officials of the
27municipality have demonstrated a failure to adequately
28implement recovery measures and, if so, request a
29determination of a fiscal emergency in accordance with
30Chapter 6;

1(3) conditions within the municipality warrant a
2termination in status in accordance with section 255.1; or

3(4) conditions as set forth in section 261 exist and, if
4so, that the governing body should initiate proceedings for
5federal debt readjustment under Subchapter D of Chapter 2.

6Section 434. Service district administrator.

7(a) Appointment.--No later than 30 days following a decree
8of the court of common pleas under section 433(e), the secretary
9shall appoint a service district administrator. The
10administrator must have a minimum of five years' experience and
11demonstrable expertise in business, financial or State or local
12budgetary matters and be a resident of this Commonwealth for at
13least one year prior to appointment.

14(b) Compensation and expenses.--The administrator's
15compensation and reimbursement for actual and necessary expenses
16shall be paid by the Commonwealth. The date and amount of
17compensation shall be established by the secretary. The
18department may require the compensation and expenses of the
19administrator to be reimbursed by an assessment for
20administrative costs under Subchapter D.

21(c) Revocation and vacancy.--The secretary may the elected
22and appointed officials of the revoke the appointment of an
23administrator at any time. A vacancy in the office of the
24administrator by way of revocation or resignation shall be
25filled in the same manner as the original appointment.

26(d) Prohibitions.--An administrator may not:

27(1) Seek or hold a position as any other elected or
28appointed public official within this Commonwealth or as a
29political party officer during the term of the
30administrator's tenure.

1(2) Seek election as a public official or political
2party officer for one year after the person's service as
3administrator has ended.

4(3) Engage in any conduct prohibited by the act of July
519, 1957 (P.L.1017, No.451), known as the State Adverse
6Interest Act, or 65 Pa.C.S. Ch. 11 (relating to ethics
7standards and financial disclosure).

8(e) Liability.--

9(1) The administrator shall not be liable personally for
10any obligations of the municipality or unincorporated service
11district.

12(2) It is declared to be the intent of the General
13Assembly that the administrator shall enjoy sovereign and
14official immunity as provided in 1 Pa.C.S. § 2310 (relating
15to sovereign immunity reaffirmed; specific waiver) and shall
16remain immune from suit except as provided by and subject to
17the provisions of 42 Pa.C.S. Ch. 85 Subchs. A (relating to
18general provisions) and B (relating to actions against
19Commonwealth parties).

20(f) Powers and duties.--Notwithstanding any other provision
21of law, the administrator shall have the following powers and
22duties:

23(1) To require the municipality to take actions
24necessary for disincorporation under section 439, including:

25(i) The sale, conveyance, assignment or other use or
26disposition of the municipality's assets as provided by
27law.

28(ii) The repayment of debt, bonds or other
29obligations before disincorporation.

30(iii) Any other action necessary to implement the

1disincorporation.

2(2) To seek a writ of mandamus against the governing
3body to carry out this subchapter.

4(3) To identify essential services which should be
5provided to the residents and property owners of the district
6after the municipality is disincorporated.

7(4) To approve, disapprove, modify, reject, terminate or
8renegotiate contracts and agreements to provide services to
9the residents and property owners of the district.

10(5) To deposit all funds collected to administer
11Subchapter D in the municipality's restricted account and to
12requisition moneys from the restricted account.

13(6) To apply for grants, loans or payments under any
14economic and community development program funded by the
15Commonwealth.

16(7) To establish fees which may be assessed to fund
17essential services provided by contract or intergovernmental
18cooperation agreements under Subchapter D.

19(8) To meet and consult with the municipal governing
20body before disincorporation and the district advisory
21committee after the establishment of the district.

22(9) To meet and consult with county officials to
23prevent, abate and mediate blight as permissible by law.

24(10) To contract for professional services to aid in the
25administrator's duties under this subchapter and Subchapter
26D.

27(11) To seek enforcement of any provision of this
28subchapter and Subchapter D.

29(12) To seek invalidation of any act by the governing
30body of the municipality in conflict with the administrator's

1essential services plan.

2Section 435. Powers and duties of municipality.

3(a) General rule.--After the review of the court of common
4pleas resulting in a decree under section 433(e), but not less
5than 30 days before the date set by the administrator for
6disincorporation to take effect, the governing body of the
7municipality shall:

8(1) Enact a budget in the municipality's projected final
9year that funds the municipality's functions until the date
10of disincorporation and provides for the payment of every
11current obligation of the municipality before the date of
12disincorporation. All remaining municipal funds as of the
13date of disincorporation shall be transferred to the
14municipality's restricted account.

15(2) Provide for the transfer and administration of any
16municipal pension obligation to a private or public pension
17fund. Nothing in this paragraph shall be construed to
18authorize a modification of the pension benefits due to any
19current or past employee of the municipality.

20(3) Provide for the appointment of the district advisory
21committee to assist the administrator after the
22disincorporation of the municipality.

23(b) Corporate powers reserved.--After the review of the
24court of common pleas resulting in a decree under section 433(e)
25until the date of disincorporation, the governing body shall
26retain all corporate powers otherwise authorized by law, except
27that it shall not take any action inconsistent with the
28administrator's plan for disincorporation.

29(c) Establishment of governing standards for district.--

30(1) The governing body of the municipality may adopt

1recommended governing standards which may be included by the
2administrator in the essential services plan as the governing
3standards of the district.

4(2) If the governing body adopts recommended governing
5standards, the following shall apply:

6(i) No later than 30 days following a decree of the
7court of common pleas under section 433(e), the governing
8body shall provide written notice to the administrator
9that the governing body intends to adopt an ordinance
10containing recommended governing standards for the
11inclusion in the essential services plan.

12(ii) No later than 60 days following the notice
13provided under subparagraph (i), the governing body shall
14adopt an ordinance containing recommended governing
15standards for inclusion in the essential services plan.
16The ordinance may incorporate, by reference, any
17previously enacted ordinance of the municipality.

18(d) Powers of district advisory committee authorized.--After
19the review of the court of common pleas resulting in a decree
20under section 433(e) but prior to the date of disincorporation,
21in addition to the powers provided for under this subchapter,
22the governing body of the municipality may advise the
23administrator in the manner provided for the district advisory
24committee under Subchapter D in the formation and amendment of
25the essential services plan.

26Section 436. Essential services plan.

27(a) Formation.--The administrator shall, within 90 days
28following appointment and in consultation with the department,
29develop an essential services plan to provide essential services
30after the date of disincorporation. The essential services plan

1shall provide for:

2(1) Negotiation of contracts for the provision of vital
3and necessary services, not otherwise provided by an
4authority, as defined under Chapters 6 and 7. If the
5municipality participates in a regional police or fire
6department through an intergovernmental cooperation
7agreement, the essential services plan may provide for
8continued service from that regional department by contract
9or by renegotiating the intergovernmental cooperation
10agreement.

11(2) Local emergency management in accordance with the
12plan and program of the Pennsylvania Emergency Management
13Agency. The administrator shall consult with the emergency
14management organization of the county where the district is
15located to develop a plan which serves the district in a
16substantially similar manner as plans required for a
17political subdivision under 35 Pa.C.S. Ch. 75 Subch. A
18(relating to general provisions). The plan shall include a
19procedure for a declaration of a disaster emergency to be
20made in the district and the designation of a local
21coordinator of emergency management. The administrator is
22authorized to negotiate any contracts which are necessary to
23provide for the execution of a plan formed under this
24paragraph.

25(3) Payment of the lawful financial obligations of the
26unincorporated service district, including any transferred
27current obligation of the municipality and service of any
28debt incurred by the municipality in the manner provided by
29Subchapter D, after the disincorporation of the municipality.

30(4) Assessment of fees as provided by Subchapter D.

1(5) Disposition of all municipal property by sale, lease
2or conveyance for any of the following purposes:

3(i) Payment of outstanding debt obligations.

4(ii) Provision of services by an entity contracting
5with the unincorporated service district.

6(iii) Possession of title by the Commonwealth as
7provided by Subchapter D.

8(6) Termination of all contracts with the municipality.

9(7) Administration of the unincorporated service
10district, which may include reimbursement to the department
11for the compensation of the administrator.

12(8) Establishment of the date of disincorporation of the
13municipality as provided for by section 439.

14(9) Establishment of the name of the district. A
15district established by this act shall be named "The
16Unincorporated District of ........................."

17(b) Restrictions.--An essential services plan may not:

18(1) Provide for the levy of any taxes.

19(2) Terminate an obligation to repay any debt, except
20that the plan may designate the unincorporated service
21district as the servicer of a debt and may specify that a
22debt secured by the collection of taxes shall be secured by
23the assessment of fees sufficient to satisfy the service
24obligations of the debt.

25(3) Assess and collect a higher amount of fees in the
26district's first full calendar year totaling 5% more than the
27total taxes levied in the municipality's final year before
28disincorporation.

29(4) Authorize the incurrence of any debt by the
30district, except as provided under section 441(k).

1(c) Governing standards of the district.--

2(1) The essential services plan shall provide for
3governing standards, which standards shall include:

4(i) Rules and conduct related to the maintenance of
5property, conduct in public places and the parking of
6vehicles in public places which shall protect the health,
7safety and welfare of the residents and property owners
8of the district to the extent such rules and conduct
9could have been adopted by the municipality by ordinance.

10(ii) Fines and other relief which may be granted by
11a court presiding over a civil action brought for a
12violation of the governing standards.

13(2) If the governing body of the municipality adopts
14recommended governing standards as provided in section
15435(c), the administrator shall include the recommended
16governing standards in the essential services plan unless the
17administrator finds that the recommended governing standards
18are unlawful, unconstitutional or would substantially impede
19the administration of the essential services plan.

20Section 437. Proposed essential services plan.

21(a) Filing.--Within 90 days of the appointment of the
22administrator, the administrator shall deliver true and correct
23copies of the proposed essential services plan to:

24(1) The municipal clerk or municipal secretary, who
25shall immediately place the copy on file for public
26inspection in the municipal office.

27(2) The secretary.

28(3) Each member of the municipal governing body.

29(4) The chief executive officer of the municipality.

30(5) The chief financial officer of the municipality.

1(6) The solicitor of the municipal governing body.

2(b) Date of filing.--For purposes of this section, the date
3of filing the proposed essential services plan shall be the date
4on which the municipal clerk or municipal secretary places a
5true and correct copy of the proposed essential services plan on
6file for public inspection in the municipal office.

7(c) Notices of proposed essential services plan.--

8(1) On the date of filing, notice that a proposed
9essential services plan has been filed and is open for public
10inspection in the municipal office shall be published by the
11administrator in the county legal reporter and in one or more
12newspapers with general circulation serving the area in which
13the municipality is located. The cost for publishing the
14notice shall be borne by the department. The notice shall
15contain the following:

16(i) A statement that a proposed essential services
17plan has been filed regarding the provision of essential
18services to the residents and property owners of the
19unincorporated service district which shall succeed the
20municipality after disincorporation.

21(ii) The date and place of filing.

22(iii) A statement that the public has 15 days from
23the date of filing in which to file written comments
24relating to the proposed essential services plan.

25(iv) The name and address of the administrator to
26whom written comments should be sent.

27(v) Summary of the proposed essential services plan.

28(2) Notice of an administrator's public meeting on the
29proposed essential services plan shall be published by the
30administrator in the county legal reporter and in one or more

1newspapers with general circulation serving the area in which
2the municipality is located. The department shall bear the
3cost for publishing the notice. The notice shall contain the
4following:

5(i) A statement that the purpose of the
6administrator's public meeting is to receive public
7comments on the proposed essential services plan.

8(ii) The date and place of the meeting.

9(3) The administrator may combine the publication of the
10notice that a proposed essential services plan has been filed
11with the publication of the notice of the public meeting.

12(d) Comment period.--Written comments on the proposed
13essential services plan may be filed with the administrator.
14Written comments shall be made no later than 15 days after the
15date of filing. Written comments judged by the administrator to
16have value to the proposed essential services plan may be used
17to develop revisions for a final essential services plan.

18(e) Administrator's public meeting.--A meeting conducted by
19the administrator in the municipality shall be set for a date no
20later than 20 days after the date of filing the proposed
21essential services plan. The administrator shall request in
22writing that the chief executive officer, each member of the
23municipal governing body and the chief financial officer of the
24municipality to be present at the service administrator's
25meeting. At that meeting, the administrator shall:

26(1) Present a summary of the proposed essential services
27plan.

28(2) Receive public comment on the proposed essential
29services plan.

30(3) Allow the members of the governing body of the

1municipality to present written and oral comments requesting
2revisions of the proposed essential services plan.

3Section 438. Final essential services plan.

4(a) Amendment of plan.--

5(1) The administrator shall consider all timely
6submitted written comments, comments presented at the public
7meeting and requests for revision in the amendment of the
8publicly presented proposed essential services plan before
9publishing a final essential services plan.

10(2) In the event that the administrator does not
11incorporate the requests for revision by the members of the
12governing body of the municipality regarding the levels of
13services provided under the proposed essential services plan
14or the basis for the calculation of fees assessed under the
15proposed essential services plan, the administrator shall
16state in the proposed essential services plan why the
17requested revisions were not feasible to incorporate in the
18final essential services plan.

19(b) Notice of final essential services plan.--Within 45 days
20of the public meeting the administrator shall file the final
21essential services plan with the persons listed in section
22437(a) and provide notice of the publication of the final
23essential services plan in the manner provided in section
24437(c)(1)(i), (ii) and (v).

25(c) Appeal.--

26(1) Any person aggrieved by the final essential services
27plan may appeal the plan to the court of common pleas within
2830 days of notice of the filing of the final essential
29services plan. For purposes of this section, notice shall
30constitute the date that the person received actual notice of

1the final essential services plan, or the date that notice of
2the filing of the final essential services plan is first
3published in a newspaper with general circulation serving the
4area in which the municipality is located.

5(2) No appeal of a final essential services plan shall
6constitute an automatic stay of the essential services plan.

7(3) The appeal shall be sustained only where the court
8finds that the final essential services plan is unlawful or
9unconstitutional, or the conduct of the administrator is
10arbitrary or capricious.

11Section 439. Disincorporation of municipality.

12(a) Effects of disincorporation.--On the date of
13disincorporation, the following shall occur:

14(1) Notwithstanding any other provision of law, the
15terms of office of all elected officials of the municipality
16shall end and no person shall be elected or appointed to fill
17any vacancy of office.

18(2) All ordinances of the municipality shall be
19nullified.

20(3) All corporate powers granted to the municipality
21under its charter, municipal code or any other provision of
22law shall terminate.

23(4) The municipality shall be deemed by operation of law
24to be disincorporated. The area formerly contained within the
25municipality shall be an unincorporated service district as
26provided under Subchapter D.

27(b) Duties of administrator.--On or before the date of
28disincorporation, the administrator shall:

29(1) Execute all contracts for the provision of services
30and otherwise implement the essential services plan, which

1shall take effect on the date of disincorporation.

2(2) Provide notice of assessments to the property owners
3of the unincorporated service district according to the
4procedure provided in section 443(b) which may be a partial
5year assessment as provided by section 443(e).

6(3) Provide notice to the Governor and all Commonwealth
7agencies that the municipality has been disincorporated and
8the date of disincorporation.

9(c) Duties of county.--Effective on the date of
10disincorporation, notwithstanding any other provision of law,
11the county in which the municipality is located shall:

12(1) Adopt a zoning ordinance which applies to the
13unincorporated service district and adopts the substantive
14provisions of the municipality's zoning ordinance, if any, as
15it was in effect before nullification by subsection (a)(2).

16(2) Adopt an official map for the unincorporated service
17district which adopts the substance of the municipality's
18official map, if any, as it was in effect before
19nullification by subsection (a)(2).

20(3) Unless the county has adopted a subdivision and land
21development ordinance prior to the date of disincorporation
22of the municipality, adopt a subdivision and land development
23ordinance which shall apply to any unincorporated service
24district within the county.

25(4) Provide for the administration of the zoning
26ordinance and the subdivision and land development ordinance
27as they apply to the unincorporated service district and any
28other provisions of the act of July 31, 1968 (P.L.805,
29No.247), known as the Pennsylvania Municipalities Planning
30Code, that may be applicable.

1(5) Amend the county's comprehensive plan to the extent
2necessary to be consistent with the requirements of this
3subsection.

4(d) Property succession.--Immediately following
5disincorporation the area formerly contained within the
6municipality shall, by operation of law, be deemed an
7unincorporated service district under Subchapter D, the
8Commonwealth shall succeed in title to all property, including
9all real property, personal property and moneys in any municipal
10account, of the disincorporated municipality to be held in trust
11for the benefit of the residents and property owners of the
12unincorporated service district as provided under Subchapter D.

13SUBCHAPTER D

14UNINCORPORATED SERVICE DISTRICT

15Section 441. Establishment of unincorporated service district.

16(a) General rule.--The area formerly contained within a
17municipality shall, after disincorporation under Subchapter C,
18become an unincorporated service district. The district shall be
19an entity of the Commonwealth established for the special
20purpose of providing essential services to the citizens living
21within the district until such time as the district is
22incorporated as a municipality or made a part of a merged or
23consolidated with an existing municipality under section 447.

24(b) Authorized administrative authority.--All powers
25providing for the administration of the district shall be vested
26in the department through the administrator as provided in this
27subchapter. The district advisory committee shall not possess
28the corporate powers of the governing body of any municipality
29or any authority, except as provided by this subchapter.

30(c) Corporate powers prohibited.--Nothing in this subchapter

1shall be construed as authorizing the district to exercise
2corporate powers for the administration of a local government,
3including the power to levy taxes, establish elected or
4appointed offices and purchase, sell or convey property, except
5that the residents of the district may incorporate a
6municipality or merge or consolidate with an existing
7municipality as provided for in section 447.

8(d) Assets held by Commonwealth in trust.--

9(1) All assets not sold by the municipality during the
10process of its disincorporation shall be conveyed to the
11Commonwealth to be held in trust for the benefit of the
12residents and property owners of the district.

13(2) The administrator shall serve as trustee of the
14property and provide for the repair and maintenance of all
15real property and roadways held in trust for the benefit of
16the residents and property owners of the district through the
17collection of assessments under this subchapter and
18administration of payments distributed to the district as
19provided in subsection (f).

20(3) Nothing in this subsection shall be construed as
21providing the express approval of the General Assembly to
22dispose of or use any lands acquired with funds under the act
23of June 22, 1964 (Sp.Sess., P.L.131, No.8), known as the
24Project 70 Land Acquisition and Borrowing Act, for purposes
25other than those provided by that act, except that the
26Commonwealth may succeed in title of the property for the
27limited purposes established by this subsection.

28(e) Former municipal debt secured by entrusted assets.--

29(1) All debt incurred by the municipality before the
30establishment of the district shall be held by the district

1for administration by the administrator. Any such debt shall
2be secured by the assets conveyed to the Commonwealth and
3held in trust under subsection (d) and serviced by fees
4collected under this subchapter.

5(2) Nothing in this section shall be construed to
6authorize the Commonwealth to guarantee any debt incurred by
7a municipality or district with the full faith and credit of
8the Commonwealth, revenues from the General Fund or any other
9source of revenue not derived from fees assessed for the
10administration of this subchapter or gains from the sale of
11assets of the former municipality.

12(f) Eligibility for State grants and programs unaffected.--

13(1) A district shall be eligible to receive any
14financial grant, loan or payment and participate in any
15program for which it was eligible when it was a municipality,
16including, but not limited to, <-emergency grants and loans 
17under Chapter 3, payments distributed pursuant to the act of
18June 1, 1956 (1955 P.L.1944, No.655), referred to as the
19Liquid Fuels Tax Municipal Allocation Law, all programs
20administered by the Pennsylvania Infrastructure Investment
21Authority and all economic and community development programs
22funded by the Commonwealth.

23(2) A district shall continue to receive priority in all
24economic and community development programs funded by the
25Commonwealth as provided for by Subchapter E of Chapter 2.

26(3) The administrator may apply for and shall manage any
27funds distributed to the district pursuant to this section.

28(g) Credit for fees assessed.--The payment of fees under
29this subchapter by a resident of a district shall constitute a
30credit against the collection of any income tax by a

1municipality on nonresidents, if applicable.

2(h) Relationship with existing municipal and other
3authorities preserved.--

4(1) All authorities established to provide services to
5the residents and property owners of a municipality prior to
6disincorporation shall continue to serve the residents and
7property owners of a district, and all members of the
8authority appointed by the governing body of the municipality
9prior to disincorporation shall continue to serve out the
10remainder of the members' terms.

11(2) Notwithstanding the provisions of 53 Pa.C.S. § 5607
12(relating to purposes and powers) or any other provision of
13law, subsequent appointments to the authority board which
14would otherwise be made by the governing body of the
15municipality shall be made by the administrator in
16consultation with the district advisory committee.

17(i) Governing standards enforceable.--

18(1) The governing standards included in the essential
19services plan shall be enforceable by the filing of a civil
20action by the administrator or any aggrieved property owner
21or resident of the district.

22(2) A violation of the governing standards shall
23constitute a public nuisance.

24(3) A magisterial district court or another court of
25competent jurisdiction presiding over a civil action brought
26under this subsection may find relief for the filing party
27according to the relief provided for in the essential
28services plan or any other relief which is available by law
29for the abatement of a public nuisance.

30(j) Pennsylvania Construction Code applicable.--

1(1) The act of November 10, 1999 (P.L.491, No.45), known
2as the Pennsylvania Construction Code Act, shall apply to all
3construction, alteration, repair and occupancy of all
4buildings within the district as though the district were a
5municipality which opted not to adopt the uniform
6construction code by ordinance.

7(2) The administrator shall receive any application for
8a construction permit and provide appropriate notices to an
9applicant of a construction permit and the Department of
10Labor and Industry as provided under section 501(e) of the
11Pennsylvania Construction Code Act.

12(k) Incurrence of debt limited.--The district shall not
13incur debts not provided for in subsection (e), except that the
14administrator may utilize such mechanisms as are necessary to
15incur temporary debts, or make purchases on credit, on behalf of
16and for the limited purpose of managing the cash flow for the
17district. All obligations incurred under this subsection shall
18be satisfied in full within one year and secured only by the
19anticipation of the collection of assessments under section 443.

20Section 442. Service district advisory committee.

21(a) Establishment.--Each service district shall establish a
22service district advisory committee.

23(b) Composition.--The district advisory committee shall be
24composed of three persons who are at least 18 years of age,
25including two resident property owners of the district and one
26owner of a business within the district, if any, who may or may
27not be a resident of the district.

28(c) Appointment by governing body.--At least 30 days prior
29to the date of disincorporation, the governing body of the
30former municipality shall appoint three members of the district

1advisory committee. The governing body shall designate that one
2appointee serve a term of one year, one appointee serve a term
3of two years and one appointee serve a term of three years.

4(d) Vacancy.--At the expiration of the term of a member of
5the district advisory committee, the remaining members of the
6committee shall appoint a person to fill the vacancy. In the
7event that the remaining members of the committee are unable to
8agree on a person to fill the vacancy or there is more than one
9vacancy, the administrator shall select a person or persons to
10fill the vacancy. All persons appointed to fill a vacancy on the
11district advisory committee shall have a term of three years
12beginning on the date of appointment.

13(e) Advise administrator.--The district advisory committee
14shall, at least once every three months, meet with the
15administrator and may make recommendations to the administrator
16for revisions to the essential services plan, including
17revisions to the levels of services provided to the residents
18and property owners of the district and methodology of rate
19calculation. The administrator shall consider all
20recommendations of the district advisory committee.

21(f) Advise county on land use issues.--The district advisory
22committee may provide recommendations on behalf of the residents
23and property owners of the district to any county official
24regarding any land use-related matter.

25(g) Advise department on incorporation.--The district
26advisory committee may provide recommendations to the department
27at any time that the residents of the district and the
28department consider the feasibility of incorporating as a viable
29municipality or merger or consolidation with an existing
30municipality.

1(h) Recommended amendment of governing standards.--

2(1) Amendments to the governing standards may be
3recommended by a majority vote of the district advisory
4committee or by a petition signed by registered electors of
5the municipality comprising at least 10% of the number of
6electors voting for the office of Governor in the last
7gubernatorial general election.

8(2) Upon receipt of a recommendation made under this
9subsection, the administrator shall include the recommended
10amendments to the governing standard as a proposed plan
11amendment under section 444, unless the administrator finds
12that the recommended amendment of the governing standards is
13unlawful, unconstitutional or would substantially impede the
14administration of the essential services plan.

15(i) Restrictions.--The district advisory committee shall
16have no authority to act as a municipal governing body.

17(j) Open meetings.--The district advisory committee shall be
18an agency for purposes of the open meeting provisions of 65
19Pa.C.S. Ch.7 (relating to open meetings).

20Section 443. Assessments.

21(a) Authority to assess.--The administrator may establish
22assessments on a front foot or benefit-conferred basis, or a
23combination of both, on all real property within the district to
24provide for:

25(1) The cost of all essential services provided to the
26district.

27(2) The service of all debts held in trust by the
28Commonwealth which were incurred by the former municipality
29prior to disincorporation.

30(3) The necessary construction, maintenance or repair of

1facilities or properties which have been conveyed to the
2Commonwealth and are held in trust for the benefit of the
3district.

4(4) Reimbursement to the department of its reasonable
5costs of administration of the district, including, but not
6limited to, the compensation of the administrator and the
7collection of assessments authorized under this section.

8(5) Other costs incurred by the district or
9administrator in the execution of this subchapter, including
10a reserve of no more than 15% of the annual estimated costs
11of the essential services plan in the restricted account
12established in section 445 to provide for the provision of
13unforeseeable costs.

14(b) Establishment of assessment.--

15(1) No later than October 1 of the year preceding the
16year for which the assessment applies, the administrator
17shall establish a schedule of assessment for all real
18property within the unincorporated district.

19(2) The administrator shall provide written personal
20notice to each property owner of each property of the
21assessment due for the ensuing year no later than November 1
22of the year preceding the year for which the assessment
23applies.

24(3) As used in this subsection, "personal notice" shall
25mean and include notice upon the owner of a property either
26by personal service upon the owner or by certified mail to
27the owner at the owner's last known address or where service,
28after a reasonable attempt, shall not have been successfully
29made by either of these two methods, then by leaving notice
30at or upon the property.

1(c) Appeal of assessment.--Any person wishing to challenge
2the reasonableness of the assessment may file a suit in the
3court of common pleas within 30 days of receiving the notice
4provided in subsection (b).

5(d) Payment of assessments.--Payment of the assessment in
6full shall be due no later than March 1, unless the
7administrator has provided for installment payments in
8accordance with subsection (e).

9(e) Installments.--The administrator may provide for the
10payment of assessments by equal installments on a quarterly or
11semiannual basis as follows:

12(1) The administrator shall provide written personal
13notice of the installment plan to owners containing the date
14installments are due, interest and prepayment.

15(2) The rate of interest for the installments shall be
16established by the administrator at a rate of 6% per year.

17(3) If any of the installments remain unpaid for 60 days
18after the same has become due and payable, the entire unpaid
19assessment, plus unpaid accrued interest and any costs, shall
20be due and payable and the administrator shall proceed to
21collect the assessment due as provided in subsection (g).

22(4) A property owner upon whom an assessment has been
23made may pay all or as many of the installments before the
24same are due, with interest and costs to the due date of the
25next installment.

26(f) First year assessment.--The administrator may provide
27for a partial assessment for the calendar year in which the
28disincorporation of the municipality occurs. The due date for a
29partial year assessment and installment schedule may be set by
30the administrator, provided that no assessment shall be due

1sooner than 60 days after the administrator provides written
2personal notice of the assessment under the procedure in
3subsection (a).

4(g) Delinquent assessments.--Assessments remaining unpaid on
5December 31 of the year in which they are due shall be
6delinquent and subject to interest at a rate of 10% per year
7from the date of filing as a lien in accordance with the act of
8May 16, 1923 (P.L.207, No.153), referred to as the Municipal
9Claim and Tax Lien Law.

10(h) Liens.--An assessment, together with all charges,
11expenses and fees, including reasonable attorney fees necessary
12for its collection, shall be a lien upon the real property
13benefited. The lien shall have the same priority and may be
14collected in the same manner as a municipal lien in accordance
15with the Municipal Claim and Tax Lien Law or through a civil
16action initiated by the administrator.

17(i) Limited assessment of public property.--An assessment
18under this section on property held by the Federal Government,
19the Commonwealth and any other public property shall be limited
20to an assessment for those services which are directly consumed
21by the property, including, but not limited to, water service,
22sewer service and waste collection.

23Section 444. Amendment of essential services plan.

24(a) Periodic review.--No less than once per year, the
25administrator shall meet with the district advisory committee to
26consider the adequacy of the essential services plan and
27consider any request for revision of the essential services plan
28made by the district advisory committee.

29(b) Filing of amendment.--The administrator may file a
30proposed essential services plan amendment with the secretary

1and each member of the district advisory committee at any time.
2The district advisory committee may request a public meeting to
3consider the amendment within five days of the filing of a
4proposed essential services plan amendment.

5(c) Notice of amendment.--No later than the date that the
6administrator files the proposed essential services plan
7amendment, the administrator shall provide notice to the public
8of the amended essential services plan using the procedure
9provided for by section 437(c)(1). If the district advisory
10committee requests a public hearing, the administrator shall
11schedule a public meeting within 30 days of the date that the
12proposed essential services plan amendment was filed and provide
13notice of the public meeting using the procedure provided for by
14section 437(c)(2).

15(d) Comment period.--Written comments on the proposed
16essential services plan amendment may be filed with the
17administrator. Written comments must be made no later than 15
18days after the date of filing. Written comments judged by the
19administrator to have value to the essential services plan may
20be used to develop revisions for a final essential services plan
21amendment.

22(e) Administrator's public meeting.--If a public meeting is
23scheduled at the request of the district advisory committee, the
24administrator shall request in writing that the members of the
25district advisory committee be present at the administrator's
26meeting. At that meeting, the administrator shall:

27(1) Present a summary of the proposed essential services
28plan amendment.

29(2) Receive public comment on the proposed essential
30services plan amendment.

1(3) Allow the members of the district advisory committee
2to present written and oral comments requesting revisions of
3the proposed essential services plan amendment.

4(f) Final essential services plan amendment.--The
5administrator shall consider all timely submitted written
6comments, comments presented at the public meeting and requests
7for revision in the amendment of the publicly presented proposed
8essential services plan before filing a final essential services
9plan amendment. In the event that the administrator does not
10incorporate the requests for revision by the district advisory
11committee regarding the levels of services provided under the
12essential services plan or the basis for the calculation of fees
13assessed under the essential services plan, the administrator
14shall state in the essential services plan amendment why the
15requested revisions were not feasible to incorporate in the
16final essential services plan.

17(g) Emergency essential services plan amendment.--
18Notwithstanding the requirements provided by this section for
19the adoption of a final essential services plan amendment, where
20the secretary finds that there is or will be an imminent threat
21to public safety, human health or the environment, the secretary
22may provide a waiver to the administrator allowing the
23administrator to immediately publish an emergency essential
24services plan amendment. An emergency essential services plan
25amendment shall take effect immediately.

26(h) Notice of final essential services plan amendment.--The
27administrator shall provide notice of the publication of the
28final essential services plan amendment or emergency essential
29services plan amendment in the manner provided in section 437(c)
30(1)(i), (ii) and (v). Upon providing notice as required by this

1chapter, the administrator may execute any contract necessary to
2administer the essential services plan, as amended.

3(i) Appeal.--

4(1) Any person aggrieved by a final essential services
5plan amendment or emergency essential services plan amendment
6may appeal the final essential services plan amendment to the
7court of common pleas within 30 days of notice of the filing
8of the final essential services plan amendment.

9(2) For purposes of this section, notice shall
10constitute the date that the person received actual notice of
11the final essential services plan amendment, or the date that
12notice of the filing of the final essential services plan
13amendment is first published in a newspaper with general
14circulation serving the area in which the municipality is
15located.

16(3) An appeal of a final essential services plan
17amendment shall be limited to the amended portion of the
18essential services plan.

19(4) No appeal of a final essential services plan
20amendment shall constitute an automatic stay of any portion
21of the essential services plan.

22(5) The appeal shall be sustained only where the court
23finds that the final essential services plan amendment is
24unlawful or unconstitutional, or the conduct of the
25administrator is arbitrary or capricious.

26Section 445. Unincorporated Service District Trust Fund.

27(a) Establishment.--There is hereby established a special
28fund in the State Treasury, separate and apart from all other
29public moneys or funds of the Commonwealth, to be known as the
30Unincorporated Service District Trust Fund. The purpose of this

1fund shall be to hold moneys from unincorporated service
2districts and pay for the expenses and obligations of
3administrators, unincorporated service districts and the
4department pursuant to Subchapter C. The department shall
5allocate funds specific to a district in a restricted account
6pursuant to section 445.1.

7(b) Appropriation.--As much as may be necessary of such
8moneys and interest in the special fund established under
9subsection (a) is hereby appropriated for the purposes
10authorized by this subchapter.

11Section 445.1. Restricted accounts.

12(a) Establishment.--There is established in the
13Unincorporated Service District Trust Fund a restricted account
14for each unincorporated service district. The administrator for
15each district shall deposit all moneys collected by assessments,
16delinquent municipal tax receipts, and proceeds from the sale of
17municipal assets authorized under this subchapter into the
18restricted account not later than 30 days after collection. Any
19interest accrued on the account shall be credited to the account
20for purposes of meeting the requirements of this subchapter. The
21restricted account shall be used to pay for the expenses and
22obligations of the administrator and the unincorporated service
23district. The department may pay for the compensation and
24expenses of the administrator from the restricted account.

25(b) Appropriation.--As much as may be necessary of such
26moneys and interest in the restricted account established under
27subsection (a) is hereby appropriated for the purposes
28authorized by this subchapter.

29Section 446. Audit.

30The Auditor General shall conduct an annual audit of the

1district. The audit shall include a review of the services
2rendered under the essential services plan, the proceeds
3generated by the assessments levied pursuant to section 443 and
4all transactions made by the administrator on behalf of the
5district.

6Section 447. Merger and consolidation; incorporation of
7municipal corporation.

8(a) Merger and consolidation.--

9(1) For the limited purpose of merging or consolidating
10with one or more surrounding municipalities under 53 Pa.C.S.
11Ch. 7 Subch. C (relating to consolidation and merger), the
12residents of the district may file a petition with the county
13board of elections as provided in 53 Pa.C.S. §§ 735 (relating
14to initiative of electors seeking consolidation or merger
15without new home rule charter) and 735.1 (relating to
16initiative of electors seeking consolidation or merger with
17new home rule charter).

18(2) Residents of the district may be nominated to, and
19serve on, a commission formed to study merger or
20consolidation of the district with one or more
21municipalities.

22(3) Upon favorable action by the electorate on
23consolidation or merger, the administrator, in consultation
24with the district advisory committee, may enter into a merger
25or consolidation agreement with the governing bodies of other
26municipalities in accordance with 53 Pa.C.S. § 737 (relating
27to consolidation or merger agreement) and shall provide for
28the transition of the district into a consolidated or merged
29municipality with the same powers and duties as provided by
30law to governing bodies of municipalities.

1(4) The administrator may expend district funds to the
2extent authorized by law for the purpose of merger,
3consolidation or incorporation as provided in subsection (b).

4(b) Incorporation as municipality.--If the secretary
5determines that the district could be incorporated as a viable
6municipality, the residents of the district may establish or
7incorporate the territory of the district as a municipality as
8provided by law.

9(c) Grants permitted.--The department may issue any loan or
10grant authorized under Chapter 3 to a merged, consolidated or
11subsequently incorporated municipality, including the territory
12of the district to provide transitional assistance.

13(d) Assets in trust.--All assets conveyed to the
14Commonwealth to be held in trust, not otherwise transferred
15under the essential services plan or sold to repay the debt of
16the former municipality, shall be conveyed to a merged,
17consolidated or subsequently incorporated municipality,
18including the territory of the district.

19(e) Assumption of debt.--All debt obligations held in trust
20by the Commonwealth on behalf of the former municipality for
21service by a district shall be assumed by a merged, consolidated
22or subsequently incorporated municipality, including the
23territory of the district.

24Section 25. Chapter 5 of the act is repealed:

25[CHAPTER 5

26FUNDING

27Section 501. Appropriation.

28The sum of $5,000,000, appropriated under section 210 of the
29act of July 1, 1986 (P.L.1776, No.5A), known as the General
30Appropriation Act of 1986, shall be used to carry out the

1provisions of this act. The appropriation shall be distributed
2as follows:

3(1) $500,000 shall be used by the department for
4administrative expenses necessary to carry out the provisions
5of this act.

6(2) $4,500,000 shall be used to provide grants and loans
7to municipalities determined to be financially distressed
8pursuant to this act.]

9Section 26. Chapter 6 heading of the act, added October 20,
102011 (P.L.318, No.79), is amended to read:

11CHAPTER 6

12FISCAL EMERGENCIES IN [CITIES OF THE

13THIRD CLASS] MUNICIPALITIES

14Section 27. Sections 601, 602 and 603 of the act, renumbered
15and added October 20, 2011 (P.L.318, No.79), are amended to
16read:

17Section 601. Definitions.

18The following words and phrases when used in this chapter
19shall have the meanings given to them in this section unless the
20context clearly indicates otherwise:

21"Authority." A municipal authority, parking authority or any
22other authority or corporate entity that is directly or
23indirectly controlled by a distressed [city] municipality or to
24which a distressed [city] municipality has power of appointment.
25The term shall not include a joint municipal authority.

26["City." A city of the third class.]

27"Debt obligations." Any obligation to pay money, including
28amounts owed for payments relating to lease rental debt, debt
29service, bonds, notes, guarantees for bonds or notes, trust
30indentures, contracts or other agreements.

1"Distressed [city] municipality." A [city] municipality
2which has been determined to be financially distressed under
3section 203(f).

4"Fiscal emergency." A determination made by the Governor
5under section 602(b).

6"Insolvent." Unable to meet all financial obligations as
7they become due, including payment of debt obligations.

8"Municipality." A municipality as defined in section 103,
9other than a city of the first class.

10"Vital and necessary services." Basic and fundamental
11municipal services, including any of the following:

12(1) Police and fire services.

13(2) Ambulance and rescue services.

14(3) Water supply and distribution.

15(4) Wastewater services.

16(5) Refuse collection and disposal.

17(6) Snow removal.

18(7) Payroll and pension obligations.

19(8) Fulfillment of payment of debt obligations or any
20other financial obligations.

21Section 602. Declaration of fiscal emergency.

22(a) Fiscal emergency.--The Governor determines a fiscal
23emergency exists if the distressed [city] municipality:

24(1) (i) is insolvent or is projected to be insolvent
25within 180 days or less; [or] and

26(ii) is unable to ensure the continued provision of
27vital and necessary services; [and] or

28(2) [(i)] has failed to adopt or implement:

29(i) the coordinator's plan in accordance with 
30Subchapter C or C.1 of Chapter 2; or

1(ii) [has failed to adopt or implement] an
2alternative plan that the secretary has approved under
3section 246.

4(b) Governor.--Upon making a determination that a state of
5fiscal emergency exists, the Governor may declare a state of
6fiscal emergency within the distressed [city] municipality.
7Immediately upon making the declaration, the Governor shall:

8(1) Provide written notice of the declaration to the 
9governing body and, if applicable, the chief executive 
10officer of the distressed [city] municipality along with a 
11concise statement of facts supporting the determination.

12(2) Direct the secretary to, within ten days of the
13Governor's declaration, develop an emergency action plan to
14ensure that vital and necessary services are maintained
15within the [city] municipality during the state of fiscal
16emergency.

17(c) Secretary.--In developing the emergency action plan, the
18secretary shall consider the financial plan prepared by the
19coordinator under Subchapter C of Chapter 2 and any other
20available plan or information the secretary deems appropriate
21and may employ financial or legal experts to assist in
22addressing the fiscal emergency. Notwithstanding any law to the
23contrary, the employment of such experts shall not be subject to
24contractual competitive bidding procedures.

25Section 603. Notification by the secretary.

26(a) Notice.--Upon completion of the emergency action plan,
27the secretary shall cause the plan to be posted on the
28department's publicly accessible Internet website and shall
29provide written notice of the emergency action plan by overnight
30delivery service, providing proof of receipt, to all members of

1the governing body and, if applicable, the chief executive
2officer of the distressed [city] municipality.

3(b) Publication.--The secretary shall publish once in a
4newspaper of general circulation notice that the emergency
5action plan has been completed. The notice shall specify the
6publicly accessible Internet address of the department's website
7where the plan is posted.

8Section 28. Sections 604, 605, 606, 607, 608, 609 and 610 of
9the act, added October 20, 2011 (P.L.318, No.79), are amended to
10read:

11Section 604. Powers of the Governor.

12(a) Powers.--During the state of fiscal emergency, the
13Governor may exercise the authority of the elected or appointed
14officials of the distressed [city] municipality or authority as
15necessary to ensure the provision of vital and necessary
16services and may delegate the authority to the secretary or a
17designee of the secretary. The emergency powers of the Governor
18shall include the following:

19(1) The power to collect funds payable to the distressed
20[city] municipality and authority and use those funds to pay
21for vital and necessary services.

22(2) The power to obtain emergency financial aid for the
23distressed [city] municipality and authority under Chapter 3
24to pay for vital and necessary services.

25(3) The power to enter into contracts and agreements on
26behalf of the distressed [city] municipality and authority to
27pay for vital and necessary services.

28(4) The power to modify the emergency action plan as
29necessary to ensure the provision of vital and necessary
30services.

1(5) Any other power of the elected or appointed
2officials of the distressed [city] municipality or authority
3to ensure the provision of vital and necessary services.

4(b) Orders.--The Governor may issue an order to an elected
5or appointed official of the distressed [city] municipality or
6an authority to implement any provision of the emergency action
7plan or refrain from taking any action that would interfere with
8the powers granted to the Governor or the goals of the plan. An
9order issued under this subsection shall be enforceable under
10section 606.

11(c) Authorization prohibited.--Neither this chapter nor the
12emergency action plan shall be interpreted to authorize the
13Governor to:

14(1) Unilaterally levy taxes.

15(2) Unilaterally abrogate, alter or otherwise interfere
16with a lien, charge, covenant or relative priority that is:

17(i) held by a holder of a debt obligation of a
18distressed [city] municipality; and

19(ii) granted by the contract, law, rule or
20regulation governing the debt obligation.

21(3) Unilaterally impair or modify existing bonds, notes,
22municipal securities or other lawful contractual or legal
23obligations of the distressed [city] municipality or
24authority[, except as otherwise ordered by a court of
25competent jurisdiction].

26(4) Authorize the use of the proceeds of the sale,
27lease, conveyance, assignment or other use or disposition of
28the assets of the distressed [city] municipality or
29authorities in a manner contrary to section 707.

30(5) Pledge the full faith and credit of the

1Commonwealth.

2Section 605. Elected and appointed officials.

3During a fiscal emergency, the authorities and appointed and
4elected officials of the distressed [city] municipality shall
5continue to carry out the duties of their respective offices,
6except that no decision or action shall conflict with an
7emergency action plan, order or exercise of power by the
8Governor under section 604.

9Section 606. Mandamus.

10The Governor may petition Commonwealth Court to issue a writ
11of mandamus upon any elected or appointed official of the
12distressed [city] municipality or authority to secure compliance
13with an order issued under section 604(b). The court shall grant
14the relief requested within 14 days of the filing of the
15petition if it determines that the order was issued in
16compliance with this chapter.

17Section 607. Consent agreement.

18(a) Negotiations.--Within eight days of the declaration of a
19fiscal emergency, the governing body and, if applicable, the
20chief executive officer of the distressed [city] municipality
21shall convene a special public meeting to negotiate a consent
22agreement. The meeting shall be attended by the secretary or
23secretary's designee. Negotiations among creditors and any of
24the parties in this subsection shall be conducted in accordance
25with section 223(b).

26(b) Contents.--

27(1) The consent agreement shall incorporate a plan
28setting forth measures designed to provide long-term
29financial stability to the distressed [city] municipality
30after the termination of the fiscal emergency.

1(2) The consent agreement shall include all of the
2following:

3(i) Continued provision of vital and necessary
4services.

5(ii) Payment of the lawful financial obligations of 
6the distressed [city] municipality and authority. This 
7subparagraph includes debt obligations, municipal 
8securities, lease rental obligations, legal obligations 
9and consensual modifications of existing obligations, 
10except as otherwise ordered by a court of competent 
11jurisdiction.

12(iii) Timely deposit of required payments to the
13pension fund for the distressed [city] municipality and
14each authority or the fund in which the distressed [city]
15municipality and each authority participates.

16(iv) Legislative and administrative actions to be
17taken by the elected or appointed officials of the
18distressed [city] municipality during the term of the
19consent agreement.

20(3) The consent agreement may include:

21(i) The sale, lease, conveyance, assignment or other
22use or disposition of the assets of the distressed [city]
23municipality or authority.

24(ii) Approval, modification, rejection,
25renegotiation or termination of contracts or agreements
26of the distressed [city] municipality or authorities.

27(iii) Execution of new contracts or agreements.

28(4) The consent agreement may not include any of the
29following:

30(i) Projections of revenue from a tax or tax rate

1not currently authorized by law.

2(ii) Provisions that unilaterally abrogate, alter or
3otherwise interfere with a lien, charge, covenant or
4relative priority, that is:

5(A) held by a holder of a debt obligation of a
6distressed [city] municipality; and

7(B) granted by the contract, law, rule or
8regulation governing the debt obligation.

9(iii) Provisions that unilaterally impair or modify
10existing bonds, notes, municipal securities or other
11lawful contractual or legal obligations of the distressed
12[city] municipality or authority[, except as otherwise
13ordered by a court of competent jurisdiction].

14(iv) Provisions that authorize the use of the
15proceeds of the sale, lease, conveyance, assignment or
16other use or disposition of the assets of the distressed
17[city] municipality or authorities in a manner contrary
18to section 707.

19(v) Any increase in the rate of an earned income tax
20imposed on nonresident workers.

21(c) Ordinance.--Notwithstanding any law to the contrary, the
22following shall apply:

23(1) Upon approval by a majority vote of the governing
24body of the distressed [city] municipality, the consent
25agreement shall be presented to the secretary within 20 days
26of the declaration of fiscal emergency.

27(2) The secretary shall approve or disapprove the
28consent agreement within three days.

29(3) If the secretary determines that the consent
30agreement is sufficient to overcome the distressed [city's]

1municipality's financial distress and approves the agreement,
2the governing body shall enact the consent agreement in the
3form of an ordinance within seven days of approval by the
4secretary.

5(4) The ordinance shall provide that, in the event of a
6breach or unilateral modification of the consent decree by
7the governing body or an elected or appointed official, the
8Governor may institute or reinstitute proceedings under
9Chapter 7.

10(d) Consent to proceedings under Chapter 7.--In addition to
11breach or modification of the consent agreement under subsection
12(c), the following shall be deemed consent to proceedings under
13Chapter 7:

14(1) Failure of the governing body of the distressed
15[city] municipality to convene or the failure of a quorum of
16the governing body to participate in a special public meeting
17required by subsection (a).

18(2) Failure of the governing body or, if applicable, the
19chief executive officer to enact a valid ordinance under
20subsection (c).

21(3) Failure of the distressed [city] municipality to
22comply with the consent agreement or provision of an
23ordinance enacted under subsection (c).

24(4) Enactment by the distressed [city] municipality of
25an amendment to the ordinance enacted in subsection (c) in
26violation of subsection (e).

27(e) Amendment.--The ordinance may be amended upon the
28approval of the secretary.

29(f) Collective bargaining.--A collective bargaining
30agreement or arbitration settlement executed following the

1enactment of an ordinance under this section may not in any
2manner violate, expand or diminish the provisions of the consent
3agreement, provided, however, that the provisions of section 252 
4shall apply to any consent agreement adopted in accordance with 
5this subchapter.

6Section 608. Termination of fiscal emergency and suspension of
7powers.

8(a) [Financial] Fiscal emergency.--A fiscal emergency shall
9end upon certification by the secretary that the [city is no
10longer financially distressed.] municipality:

11(1) is solvent and is not projected to be insolvent
12within 180 days or less; and

13(2) is able to ensure the continued provision of vital
14and necessary services after the termination of the fiscal
15emergency.

16(b) Governor's powers.--The emergency powers of the Governor
17under this chapter shall be suspended upon the enactment and
18continued implementation of an ordinance under section 607 or
19entry of a judicial order appointing a receiver under section
20702.

21Section 609. Restrictions.

22(a) Earned income tax on nonresidents.--A distressed [city]
23municipality subject to this chapter or Chapter 7 may not
24petition a court of common pleas for an increase in the rate of
25an earned income tax imposed on nonresident workers under
26section 123(c) [until the secretary terminates the distress
27status of the city under section 253] ◄unless the conditions 
28under section 710.1(c) are met.

29(b) Municipal debt adjustment.--A distressed [city]
30municipality subject to this chapter or Chapter 7 may not file a

1municipal debt adjustment action under the Bankruptcy Code (11
2U.S.C. § 101 et seq.) except to the extent authorized under
3Chapter 7.

4Section 610. Applicability.

5(a) Statement.--

6(1) This chapter shall apply only to distressed [cities]
7municipalities.

8(2) Except as set forth in subsection (b), nothing in
9this chapter is intended to limit or otherwise abrogate the
10applicability of any other part of this act.

11(b) Conflict.--If there is a conflict between a provision of
12this chapter and any other provision of this act, the provision
13of this chapter shall prevail.

14Section 29. Chapter 7 heading of the act, added October 20,
152011 (P.L.318, No.79), is amended to read:

16CHAPTER 7

17RECEIVERSHIP IN [CITIES OF THE

18THIRD CLASS] MUNICIPALITIES

19Section 30. Sections 701, 702, 703, 704, 705(g), 706, 707,
20708 and 709 of the act, added October 20, 2011 (P.L.318, No.79),
21are amended to read:

22Section 701. Definitions.

23The following words and phrases when used in this chapter
24shall have the meanings given to them in this section unless the
25context clearly indicates otherwise:

26"Authority." A municipal authority, parking authority or any
27other authority or corporate entity that is directly or
28indirectly controlled by a distressed [city] municipality or to
29which a distressed [city] municipality has power of appointment.
30The term shall not include a joint municipal authority.

1["City." A city of the third class.]

2"Debt obligations." Any obligation to pay money, including
3amounts owed for payments relating to lease rental debt, debt
4service, bonds, notes, guarantees for bonds or notes, trust
5indentures, contracts or other agreements.

6"Distressed [city] municipality." A [city] municipality
7which has been determined to be financially distressed under
8section 203(f).

9"Fiscal emergency." A determination made by the Governor
10under section 602(b).

11"Insolvent." Unable to meet all financial obligations as
12they become due, including payment of debt obligations.

13"Vital and necessary services." Basic and fundamental
14municipal services, including any of the following:

15(1) Police and fire services.

16(2) Ambulance and rescue services.

17(3) Water supply and distribution.

18(4) Wastewater services.

19(5) Refuse collection and disposal.

20(6) Snow removal.

21(7) Payroll and pension obligations.

22(8) Fulfillment of payment of debt obligations or any
23other financial obligations.

24Section 702. Receivership.

25(a) Receiver.--Following the issuance of a declaration of
26fiscal emergency under section 602(b), the Governor may direct
27the secretary to file a petition in Commonwealth Court to
28appoint the individual named in the petition as a receiver for
29the distressed [city] municipality. The court shall have no
30authority to appoint anyone other than the individual named in

1the petition as the receiver.

2(b) Service and notice.--

3(1) The secretary shall serve the petition upon:

4(i) the governing body of the distressed [city]
5municipality;

6(ii) the chief executive officer of the distressed
7[city] municipality; and

8(iii) the governing body of each authority.

9(2) The secretary must publish notice of the filing of
10the petition once in a newspaper of general circulation.

11(c) Hearing.--Upon notification of the Governor of the
12failure of the distressed [city] municipality to adopt a valid
13ordinance under section 607, Commonwealth Court shall conduct a
14hearing within 15 days on the petition.

15(d) Determination.--No later than 60 days following the
16filing of a petition under this section, the court shall issue
17an order under subsection (e) if it finds by a preponderance of
18the evidence that all of the following apply:

19(1) Thirty days have passed since the declaration of a
20fiscal emergency.

21(2) There has been a failure by:

22(i) the governing body of the distressed [city]
23municipality to adopt an ordinance under section 607;

24(ii) the governing body of the distressed [city]
25municipality to implement an ordinance under section 607;
26[or]

27(iii) an elected or appointed official of the
28distressed city or authority to strictly comply with an
29order issued by the Governor under section 604[.]; or

30(iv) (Reserved).

1(3) A fiscal emergency under section 602(a) continues to
2exist.

3(e) Order.--An order issued under this subsection shall:

4(1) set forth the findings under subsection (d);

5(2) grant the petition and declare the distressed [city]
6municipality to be in receivership;

7(3) appoint the individual named in the petition to be
8the receiver for a period not to exceed two years, subject to
9extension under section 710(b);

10(4) direct the receiver to develop a recovery plan
11within 30 days under section 703 and submit it to the court,
12the secretary, the governing body and, if applicable, the
13chief executive officer of the distressed [city]
14municipality; and

15(5) require and empower the receiver to implement the
16emergency action plan developed by the secretary under
17section 602 until a recovery plan developed by the receiver
18is approved by the court under section 703.

19(f) Additional actions.--

20(1) The Governor may direct the secretary to file a
21petition in Commonwealth Court to appoint an individual named
22in the petition as a receiver for the distressed [city]
23municipality if the distressed [city] municipality fails to
24comply with or has amended the ordinance without the approval
25of the secretary under section 607(d)(3) or (4).

26(2) The court shall conduct a hearing on the petition
27under paragraph (1) within 15 days of the filing of the
28petition.

29(3) No later than 60 days following the filing of the 
30petition under paragraph (1), the court shall issue an order
 

1under subsection (e) if it finds by a preponderance of the 
2evidence that the distressed [city] municipality has failed 
3to comply with section 607(d)(3) or (4).

4Section 703. Recovery plan.

5(a) Issuance.--Within 30 days of the appointment of the
6receiver, the recovery plan required under section 702(e)(4)
7shall be furnished to Commonwealth Court, the secretary and the
8governing body and, if applicable, the chief executive officer
9of the distressed [city] municipality.

10(b) Contents.--The receiver shall consider the plan prepared
11by the coordinator under section 241 and any other existing
12alternate plans in the development of the recovery plan. The
13following shall apply:

14(1) The recovery plan shall provide for all of the
15following:

16(i) Continued provision of vital and necessary
17services.

18(ii) Payment of the lawful financial obligations of 
19the distressed [city] municipality and authorities. This 
20subparagraph includes debt obligations, municipal 
21securities, lease rental obligations, legal obligations 
22and consensual modifications of existing obligations.

23(iii) Timely deposit of required payments to the
24pension fund in which the distressed [city] municipality
25and each authority participates.

26(2) The recovery plan may include:

27(i) the sale, lease, conveyance, assignment or other
28use or disposition of the assets of the distressed [city]
29municipality or authority;

30(ii) the approval, modification, rejection,

1renegotiation or termination of contracts or agreements
2of the distressed [city] municipality or authorities,
3except to the extent prohibited by the Constitutions of
4the United States and Pennsylvania;

5(iii) the execution of new contracts or agreements;
6and

7(iv) other information the receiver deems
8appropriate.

9(c) Restrictions.--The recovery plan may not do any of the
10following:

11(1) Unilaterally levy taxes.

12(2) Unilaterally abrogate, alter or otherwise interfere
13with a lien, charge, covenant or relative priority that is:

14(i) held by a holder of a debt obligation of a
15distressed [city] municipality; and

16(ii) granted by the contract, law, rule or
17regulation governing the debt obligation.

18(3) Unilaterally impair or modify existing bonds, notes,
19municipal securities or other lawful contractual or legal
20obligations of the distressed [city] municipality or
21authority[, except as otherwise ordered by a court of
22competent jurisdiction].

23(4) Authorize the use of the proceeds of the sale,
24lease, conveyance, assignment or other use or disposition of
25the assets of the distressed [city] municipality or authority
26in a manner contrary to section 707.

27(d) Confirmation.--Commonwealth Court shall conduct a
28hearing on the recovery plan within 30 days of the receipt of
29the plan from the receiver. The court shall confirm the plan
30within 60 days of the receipt of the plan unless it finds clear

1and convincing evidence that the plan is arbitrary, capricious
2or wholly inadequate to alleviate the fiscal emergency in the
3distressed [city] municipality.

4(e) Modification of plan.--The receiver shall notify the
5Commonwealth Court of any modification to the plan. The court
6may conduct a hearing on the modification within 30 days of its
7receipt. The court shall confirm the modification within 60 days
8of receipt of notification of the modification unless it finds
9clear and convincing evidence that the recovery plan as modified
10is arbitrary, capricious or wholly inadequate to alleviate the
11fiscal emergency in the distressed [city] municipality.

12Section 704. Confirmation.

13(a) Effect of confirmation.--The confirmation of the
14recovery plan and any modification to the receiver's plan under
15section 703 shall have the effect of:

16(1) imposing on the elected and appointed officials of
17the distressed [city] municipality or an authority a
18mandatory duty to undertake the acts set forth in the
19recovery plan;

20(2) suspending the authority of the elected and
21appointed officials of the distressed [city] municipality or
22an authority to exercise power on behalf of the distressed
23[city] municipality or authority pursuant to law, charter,
24ordinance, rule or regulation to the extent that the power
25would interfere with the powers granted to the receiver or
26the goals of the recovery plan; and

27(3) superseding the emergency action plan developed by
28the secretary under section 602.

29(b) Form of government.--Confirmation of the recovery plan
30and any modification to the plan under section 703 shall not be

1construed to:

2(1) change the form of government of the distressed
3[city] municipality or an authority; or

4(2) except as set forth in subsection (a), affect powers
5and duties of elected and appointed officials of the
6distressed [city] municipality or an authority.

7(c) Collective bargaining.--A collective bargaining
8agreement or arbitration settlement executed after confirmation
9of a recovery plan may not, in any manner, violate, expand or
10diminish the provisions of the recovery plan, provided, however, 
11that the provisions of section 252 shall apply to any recovery 
12plan adopted in accordance with this chapter.

13Section 705. Receiver.

14* * *

15(g) Liability.--The receiver shall not be liable personally 
16for any obligations of the distressed [city] municipality or 
17authority. It is declared to be the intent of the General 
18Assembly that the receiver shall enjoy sovereign and official 
19immunity as provided in 1 Pa.C.S. § 2310 (relating to sovereign 
20immunity reaffirmed; specific waiver) and shall remain immune 
21from suit except as provided by and subject to the provisions of 
2242 Pa.C.S. Ch. 85 Subchs. A (relating to general provisions) and 
23B (relating to actions against Commonwealth parties).

24Section 706. Powers, duties and prohibited actions.

25(a) Powers and duties.--Notwithstanding any other provision
26of law, the receiver shall have the following powers and duties:

27(1) To require the distressed [city] municipality or
28authority to take actions necessary to implement the recovery
29plan under section 703.

30(2) To modify the recovery plan as necessary to achieve

1financial stability of the distressed [city] municipality and
2authorities in accordance with section 703.

3(3) To require the distressed [city] municipality or
4authority to negotiate intergovernmental cooperation
5agreements between the distressed [city] municipality and
6other political subdivisions in order to eliminate and avoid
7deficits, maintain sound budgetary practices and avoid
8interruption of municipal services.

9(4) To submit quarterly reports to the governing body
10and, if applicable, the chief executive officer of the
11distressed [city] municipality and to the department. The
12reports shall be posted on [the] a publicly accessible
13Internet website [for] maintained by the distressed [city]
14municipality.

15(5) To require the distressed [city] municipality or
16authority to cause the sale, lease, conveyance, assignment or
17other use or disposition of the distressed [city's]
18municipality's or authority's assets in accordance with
19section 707.

20(6) To approve, disapprove, modify, reject, terminate or
21renegotiate contracts and agreements with the distressed
22[city] municipality or authority, except to the extent
23prohibited by the Constitutions of the United States and
24Pennsylvania.

25(7) To direct the distressed [city] municipality or
26authority to take any other action to implement the recovery
27plan.

28(8) To attend executive sessions of the governing body
29of the distressed [city] municipality or authority and make
30reports to the public on implementation of the recovery plan.

1(9) [After July 1, 2012, to] To file a municipal debt 
2adjustment action under the Bankruptcy Code (11 U.S.C. § 101 
3et seq.) and to act on the [city's] municipality's behalf in 
4the proceeding. The power under this paragraph shall only be 
5exercised upon the written authorization of the secretary. 
6The filing of a municipal debt adjustment action under this 
7paragraph and any plan of the receiver accepted by the 
8Federal court shall be considered a modification of the 
9recovery plan, except that the modification shall not be 
10subject to judicial review under section 709. A recovery plan 
11submitted to and approved by the Federal court under a 
12Federal municipal debt adjustment action may include Federal 
13remedies not otherwise available under this chapter.

14(10) To meet and consult with the advisory committee
15under section 711.

16(11) To employ financial or legal experts deemed
17necessary to develop and implement the recovery plan.
18Notwithstanding any law to the contrary, the employment of
19such experts shall not be subject to contractual competitive
20bidding procedures.

<-21(12) To make a recommendation to the secretary that the
22municipality be disincorporated in accordance with Chapter 4.

23(b) Authorization prohibited.--Neither this chapter nor the
24recovery plan shall be interpreted to authorize the receiver to
25do any of the following:

26(1) Unilaterally levy taxes.

27(2) Unilaterally abrogate, alter or otherwise interfere
28with a lien, charge, covenant or relative priority that is:

29(i) held by a holder of a debt obligation of a
30distressed [city] municipality; and

1(ii) granted by the contract, law, rule or
2regulation governing the debt obligation.

3(3) Unilaterally impair or modify existing bonds, notes,
4municipal securities or other lawful contractual or legal
5obligations of the distressed [city] municipality or
6authority[, except as otherwise ordered by a court of
7competent jurisdiction].

8(4) Authorize the use of the proceeds of the sale, 
9lease, conveyance, assignment or other use or disposition of 
10the assets of the distressed [city] municipality or authority 
11in a manner contrary to section 707.

12Section 707. Use or disposition of assets.

13(a) Use of proceeds.--The proceeds from any sale, lease,
14conveyance, assignment or other use or disposition of assets of
15the distressed [city] municipality or authority shall be applied
16to the payment of outstanding debt obligations owed by the
17distressed [city] municipality or authority, subject to any
18lien, charge, covenant, restriction, contract, law, rule or
19regulation, that encumbers or is otherwise applicable to the
20assets. Proceeds remaining after payment of outstanding debt
21obligations owed by the distressed [city] municipality or
22authority may be used by the receiver to restructure or provide
23escrow for the payment of future debt obligations or to meet
24operating and capital needs of the distressed [city]
25municipality or authority.

26(b) Prohibitions.--Nothing under this section shall be
27construed to authorize the receiver to unilaterally abrogate,
28alter or otherwise interfere with a lien, charge, covenant or
29relative priority that is:

30(1) held by a holder of a debt obligation of a

1distressed [city] municipality; and

2(2) granted by the contract, law, rule or regulation
3governing the debt obligation.

4Section 708. Elected and appointed officials.

5(a) Orders.--The receiver may issue an order to an elected
6or appointed official of the distressed [city] municipality or
7an authority to:

8(1) implement any provision of the recovery plan; and

9(2) refrain from taking any action that would interfere
10with the powers granted to the receiver or the goals of the
11recovery plan.

12(b) Enforcement.--An order issued under subsection (a) shall
13be enforceable under section 709.

14Section 709. Judicial actions.

15(a) Action by receiver.--The receiver may petition
16Commonwealth Court to issue a writ of mandamus upon any elected
17or appointed official of the distressed [city] municipality or
18authority to secure compliance with an order issued under
19section 708. The court shall grant or deny the relief within 14
20days of the filing of the petition. The court shall grant the
21relief requested if it determines that the order was issued in
22compliance with this chapter.

23(b) Action by elected or appointed officials.--Any elected 
24or appointed official of a distressed [city] municipality or 
25authority may petition Commonwealth Court to enjoin any action 
26of the receiver that is contrary to this chapter.

27Section 30.1. Section 710 of the act is amended <-by adding a 
28subsection to read:

29Section 710. Termination of receivership.

<-30* * *

<-1(a) Time.--Except as provided under subsection (b) or (c),
2the receivership under this chapter shall expire two years after
3the appointment of the receiver.

4(b) Extension.--The secretary may petition Commonwealth 
5Court for one or more extensions of the receivership. The court 
6shall grant each extension [for] of up to another two years if 
7the secretary establishes by a preponderance of the evidence 
8that further implementation of the recovery plan is necessary 
9to end the fiscal emergency.

10(c) Termination of fiscal emergency.--Notwithstanding the
11date of expiration of receivership under subsection (a) or an
12extension of receivership under subsection (b), the receivership
13shall terminate upon the secretary's termination of a fiscal
14emergency under section 608(a).

15Section 31. The act is amended by adding a section to read:

16Section 710.1. Continuation of recovery plan.

17(a) Administrative determination required.--Within 30 days
18of the termination or expiration of the receivership under
19section 710, the secretary shall issue one of the following
20administrative determinations:

21(1) conditions within the municipality warrant a
22termination in status in accordance with section 255.1; or

23(2) the municipality continues to be financially
24distressed.

25(b) Appointment of coordinator.--Upon a determination under
26subsection (a)(2), a recovery plan adopted under section 703 <-and 
27confirmed by Commonwealth Court shall remain in effect and <-shall 
28be deemed to be a plan adopted under Chapter 2. The secretary
29shall appoint a coordinator in accordance with section 221. The
30receiver may be appointed as coordinator. The coordinator shall

1implement the recovery plan under section 247(a) subject to the
2following:

3(1) The plan shall be subject to amendment in accordance
4with section 249, provided that nothing in this section shall
5authorize the impairment of existing lawful contractual or
6legal obligations of the distressed municipality except where
7otherwise permitted by law.

8(2) The coordinator may exercise the same powers and
9duties of this chapter as a receiver for the purposes of
10issuing orders under section 708, and seek enforcement of
11such orders under section 709. The Commonwealth Court shall
12retain jurisdiction to hear an action under this paragraph.

13(3) The plan shall terminate as provided in section
14254(b)(2).

<-15(c) Conditions for increasing taxes on nonresident income.--
16Notwithstanding any other provision of law, a municipality
17exiting receivership and subject to a determination under
18subsection (a)(2) shall be subject to the same requirements as a
19city of the second class A under section 123(c)(3) before being
20authorized to increase the rate of taxation on nonresident
21income.

22Section 32. Sections 711(a) and (b) and 712(a)(1) of the
23act, added October 20, 2011 (P.L.312, No.79), are amended to
24read:

25Section 711. Municipal financial recovery advisory committee.

26(a) Establishment.--[There is established a] A municipal
27financial recovery advisory committee is established to meet and
28consult with the receiver in carrying out the duties under this
29chapter. The sole function of the advisory committee shall be to
30provide recommendations and feedback to the receiver on the

1implementation of the recovery plan.

2(b) Composition.--The advisory committee established under
3subsection (a) shall be comprised of the following:

4(1) The chief executive officer, if any, of the
5distressed [city] municipality or a designee.

6(2) The president of the governing body of the
7distressed [city] municipality or a designee.

8(3) One member appointed by the county commissioners of
9the county where the distressed [city] municipality is
10located.

11(4) One member appointed by the Governor.

12* * *

13Section 712. Applicability.

14(a) Statement.--

15(1) This chapter shall apply only to distressed [cities]
16municipalities.

17* * *

18Section 33. This act shall apply as follows:

19(1) The addition of section 122(c) of the act shall
20apply to any and all regulations in effect on the effective
21date of this section.

22(2) The amendment or addition of sections 608, 710 and
23710.1(a) and (b) of the act shall not apply to a municipality
24that entered receivership prior to the effective date of this
25section and shall not supersede or constitute grounds to
26modify any order of court issued prior to the effective date
27of this section.

<-28Section 34. For tax years beginning after the effective date
29of this section, a financially distressed municipality shall be
30prohibited from using the special taxing authority in section

1607(f) of the act of December 18, 1984 (P.L.1005, No.205), known
2as the Municipal Pension Plan Funding Standard and Recovery Act,
3to impose an increase in the rate of taxation on nonresident
4income unless an equal or greater increase in the rate of
5taxation on resident income, over the highest rate levied in the
6previous fiscal year, is imposed in the same tax year.

7Section 35. The addition of section 255.1 of the act shall
8not apply to determinations issued by the Secretary of Community
9and Economic Development prior to the effective date of this
10section or to appeals pending on the effective date of this
11section.

12Section <-34 36. This act shall take effect in 60 days.