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

24Amending the act of July 10, 1987 (P.L.246, No.47), entitled "An

1act empowering the Department of Community [Affairs] and 
2Economic Development to assist municipalities in avoiding 
3financial distress; declare certain municipalities as
4financially distressed; providing for the restructuring of
5debt of financially distressed municipalities; limiting the
6ability of financially distressed municipalities to obtain
7government funding; authorizing municipalities to participate
8in Federal debt adjustment actions and bankruptcy actions
9under certain circumstances; authorizing certain taxes; and
10providing for [consolidation or merger of contiguous
11municipalities to relieve financial distress] the 
12disincorporation of municipalities and the establishment of 
13unincorporated service districts.

14Section 2. Section 102 of the act, amended Oct. 20, 2011 
15(P.L.318, No.79), is amended to read:

16Section 102. Purpose and legislative intent.

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

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

29(1) It is the intent of the General Assembly to:

30(i) Enact procedures to provide municipalities

1showing early indicators of financial distress with
2training and technical and financial assistance.

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

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

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

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

25(2) Changing and deteriorating economic conditions,
26developing technologies and attendant unemployment erode
27local tax bases and threaten essential municipal services.
28Under such circumstances, such distressed governmental units
29may no longer be viable and that the citizens of those
30communities should be granted the opportunity in accordance
 

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

9(3) Policies of certain municipalities are so
10ineffective and the financial conditions so severe that the
11provision of vital and necessary services is threatened.

12(4) Sustained failure of a municipality to enact or
13implement a fiscal plan to adequately address or prevent
14insolvency after repeated opportunities to do so:

15(i) constitutes a fiscal emergency; and

16(ii) signifies:

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

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

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

24(5) Pursuant to the Commonwealth's paramount right and
25duty to maintain law and order and protect and preserve the
26health, safety and welfare of its citizens and ensure
27compliance with this act under Article IX of the Constitution
28of Pennsylvania, the Governor is authorized to act in the
29face of a fiscal emergency under paragraph (4)(i) and
30dereliction of official duty under paragraph (4)(ii)(B).

1(6) Municipalities may face such deteriorated economic 
2conditions that all reasonable efforts to restore economic 
3viability have failed and merger or consolidation cannot 
4occur through any means provided by law. It is the intent of 
5the General Assembly that, for municipalities incapable of 
6continuing to function as general purpose units of local 
7government, procedures exist to ensure the provision of 
8essential and vital public services to the residents of those 
9areas absent a functioning municipal government.

10Section 3. Section 103 of the act, repealed Oct. 13, 1994
11(P.L.596, No.90) and added July 5, 2012 (P.L.1104, No.133), is 
12amended to read:

13Section 103. Definitions.

14The following words and phrases when used in this act shall
15have the meanings given to them in this section unless the
16context clearly indicates otherwise:

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

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

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

28"Chief executive officer." Mayor in a mayor-council form of
29government or manager in a council-manager form of government of
30a city operating under an optional form of government pursuant

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

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

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

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

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

29"Department." The Department of Community [Affairs] and 
30Economic Development of the Commonwealth.

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

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

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

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

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

26(1) Confidential information relating to personnel
27matters and matters relating to the initiation and conduct of
28investigations of violations of law. To the extent such 
29information is included in a financial record or document 
30otherwise subject to this definition, it shall be redacted
 

1and the remainder subject to disclosure as otherwise provided 
2by this act.

3(2) A financial record or document in the custody or
4control of an entity other than a municipality, municipal
5authority or other authority, except if the document relates
6to services or governmental functions performed by the
7municipality, municipal authority or on behalf of the
8municipality or municipal authority, or the revenues or
9credit of the municipality or a municipal authority.

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

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

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

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

19Section 4. Section 121(a), (b) and (c) of the act are
20amended to read:

21Section 121. Powers and duties of department.

22(a) Compile financial data.--

23(1) A power and duty of the department shall be to
24maintain accurate and current information and data on the
25fiscal status of municipalities to determine if criteria set
26forth in section 201 exist and, if so, whether the existence
27of those factors validly indicates fiscal distress.

28(2) In compiling the information and data, the
29department shall mail, before January 1 of each year, a
30Survey of Financial Condition form to each municipality

1applicable to the municipality's prior fiscal year.

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

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

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

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

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

1application as provided in Chapter 1-A. If the municipality
2adopts those recommendations, the department need take no
3further action.

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

12* * *

13Section 5. Section 122 of the act is amended by adding a
14subsection to read:

15Section 122. Duties of Commonwealth agencies.

16* * *

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

18(1) Notwithstanding any provision of law and at the
19request of the coordinator or receiver, a Commonwealth agency
20may exempt a distressed municipality from the application of
21a regulatory requirement, if the following conditions are
22satisfied:

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

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

29(2) It is the intent of this subsection that distressed
30municipalities be considered for relief from regulatory

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

5Section 6. Sections 123 and 141 of the act, amended July 11,
61996 (P.L.645, No.108), are amended to read:

7Section 123. Powers and duties of municipalities.

8(a) File completed survey.--On or before March 15 of each
9year, every municipality shall return to the department a
10completed Survey of Financial Conditions referred to in section
11121(a). No municipality shall receive its alloted payments
12pursuant to the act of June 1, 1956 (1955 P.L.1944, No.655),
13referred to as the Liquid Fuels Tax Municipal Allocation Law,
14unless it complies with the provisions of this section,
15notwithstanding a provision of law to the contrary, including 
16any provisions which require payment prior to March 15, and the
17Department of Transportation may not disburse funds to a
18municipality pursuant to the Liquid Fuels Tax Municipal
19Allocation Law until notified by the department that the
20municipality has complied with the provisions of this section.

21(b) File applications for grants and loans.--A financially
22distressed municipality may apply to the secretary for emergency
23financial aid in the form of a grant or loan pursuant to Chapter
243.

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

26(1) After a municipality has adopted a plan under
27[Subchapter C] Subchapters C and C.1 of Chapter 2, it may
28petition the court of common pleas of the county in which the
29municipality is located to increase its rates of taxation
30[for] on the earned income <-of residents and nonresidents,

1real property, or both, beyond maximum rates provided by law. 
<-2No increase in the rate of taxation on nonresidents shall be 
3authorized unless an equal or greater increase in the rate of 
4taxation on resident income over the highest rate levied in 
5the previous fiscal year is authorized in the same tax year.

6(1.1) <-In addition to the right under paragraph (1), a A
7municipality may petition the court to <-increase the rate of a
8local services tax and levy a payroll preparation tax as
9provided in subsection <-(d). (d)(2).

10(1.2) A municipality may petition the court for an
11increase in the municipality's rate of taxation for earned
12income under paragraph (1) or may petition the court for an
13increase of the local services tax as provided under
14subsection (d)(1) or (1.1).

15(2) If a tax increase above existing limits is granted
16by the courts or a tax is approved as provided in subsection 
17(d), the increase shall be effective for a period of one
18year. The one-year increase shall run from the date specified
19in the petition filed with the court or, if no such date is
20specified, from the beginning of the current fiscal year of
21the municipality. Subsequent increases in rates of taxation
22or the imposition of a tax under subsection (d) may be
23granted by the court upon annual petition of the municipality
24until the termination date of the plan adopted by the 
25municipality under Chapter 2. The additional amount of taxes
26resulting from the petition shall not be subject to sharing
27with a school district.

28(3) [A petition filed by a city of the second class A <-or 
29a home rule municipality that was previously a city of the 
30second class A under this subsection may not include an

1increase in a [tax] rate of taxation on nonresident income<-]
<-2that is greater than an increase in the rate of taxation, 
3over the highest rate levied in the previous fiscal year, on 
4resident income. A <-No increase in the rate of taxation on the 
5income of nonresidents shall be authorized in a city of the 
6second class A, or a home rule municipality that was 
7previously a city of the second class A, unless an equal or 
8greater increase in the rate of taxation on resident income 
9over the highest rate levied in the previous fiscal year is 
10authorized in the same tax year. In addition, a petition 
11shall not include an increase in a rate of taxation on 
12nonresident income unless the municipality certifies to the
13court, with regard to those provisions of the plan having a
14measurable fiscal impact, that:

15(i) the municipality has substantially implemented
16the provisions which are within the authority of the
17chief executive officer or governing body, including, but
18not limited to, provisions of the plan that call for
19increasing existing tax rates levied on residents and
20increasing fees charged by the municipality;

21(ii) the municipality has taken those actions
22required to obtain the approval of other parties for
23those provisions which may not be implemented without
24such approval, including, but not limited to, the
25approval of a court, local electors or any collective
26bargaining unit; and

27(iii) the additional income from the aforementioned
28actions is insufficient to balance the municipal budget,
29necessitating additional revenue from an increase in the
30tax on nonresident income.

1(d) Additional tax options and limitations.--After a
2municipality has adopted a plan under Subchapter C or C.1 of
3Chapter 2 and with the approval of the court, it may adopt an
4ordinance imposing the following:

5(1) A local services tax pursuant to Chapter 3 of the
6act of December 31, 1965 (P.L.1257, No.511), known as The 
7Local Tax Enabling Act, at a rate not to exceed $156. A 
8municipality adopting an ordinance under this paragraph shall 
9be prohibited from imposing any additional tax on earned 
10income pursuant to subsection (c). A municipality levying the 
11local services tax at a rate in excess of $52 shall, by 
12ordinance, exempt any person from the local services tax 
13whose total earned income and net profits from all sources 
14within the municipality is less than $15,600 for the calendar 
15year in which the local services tax is levied. This 
16paragraph does not apply to a municipality which, on the 
17effective date of this subsection, is not authorized to 
18petition the court of common pleas for the imposition of an 
19earned income tax on nonresidents.

<-20(1.1) In the case of a financially distressed
21municipality that has also received a determination that it
22has a level II or level III financially distressed pension
23system under Chapter 6 of the act of December 18, 1984
24(P.L.1005, No.205), known as the Municipal Pension Plan
25Funding Standard and Recovery Act, a petition for a local
26services tax under subsection (d)(1) shall not be authorized
27at a rate in excess of $104 in any fiscal year during which
28the municipality levies a tax under section 607(f) of the
29Municipal Pension Plan Funding Standard and Recovery Act on
30earned income.

1(2) A payroll preparation tax pursuant to section 303 of
2The Local Tax Enabling Act. A municipality imposing a tax
3under this paragraph may levy a tax at a rate as provided in
4this section and as certified by the coordinator and approved
5by the court. When imposing a tax under this paragraph the
6municipality may impose the tax not to exceed a rate that is
7sufficient to produce revenues equal to revenues collected as
8a result of a business privilege tax and a mercantile tax
9under Chapter 3 of The Local Tax Enabling Act in the
10preceding fiscal year. After approval by the court of the tax
11at the rate as provided in this section, the municipality may
12levy the tax in any subsequent year without additional court
13approval, including any year after the termination of the
14municipality's distressed status, at a rate not to exceed
15that initially approved by the court. A municipality adopting
16a payroll preparation tax under this paragraph may not levy a
17business privilege tax or mercantile tax. The authority
18provided by this paragraph is limited to those municipalities
19levying a business privilege or mercantile tax, on a flat-
20rate or millage basis, in the year of the filing of a
21petition as provided in subsection (c).

<-22(e) Local services tax in municipalities subject to this act
23with distressed pension systems.--

24(1) A financially distressed municipality that has also
25received a determination that it has a financially distressed
26pension system under section 603 of the act of December 18,
271984 (P.L.1005, No.205), known as the Municipal Pension Plan
28Funding Standard and Recovery Act, may adopt an ordinance,
29without court approval, and as recommended in a plan adopted
30under Subchapter C or C.1 of Chapter 2, imposing a local

1services tax pursuant to Chapter 3 of The Local Tax Enabling
2Act at a rate not to exceed $156, or, in a tax year during
3which the income of nonresidents is subject to a tax above
4maximum rates as provided in section 607(f) of the Municipal
5Pension Plan Funding Standard and Recovery Act, a rate not to
6exceed $104. A municipality adopting an ordinance under this
7paragraph shall be prohibited from petitioning the court for
8an increase in the rate of taxation on the income of
9nonresidents under this section. A municipality levying the
10local services tax at a rate in excess of $52 shall, by
11ordinance, exempt any person from the local services tax
12whose total income and net profits from all sources within
13the municipality is less than $15,600 for the calendar year
14in which the local services tax is levied. In addition to the
15uses authorized by section 330 of The Local Tax Enabling Act,
16revenue derived from a rate in excess of $52 may only be used
17for municipal purposes as provided in the plan. This 
18paragraph does not apply to a municipality which, on the 
19effective date of this subsection, is not authorized to 
20petition the court of common pleas for the imposition of an 
21earned income tax on nonresidents.

22(2) A municipality that has levied a local services tax
23pursuant to paragraph (1) may continue to levy a local
24services tax at a rate in excess of $52 in accordance with
25paragraph (1) in any subsequent year, provided that a tax
26levied for any year after a termination of distressed status
27shall be authorized subject to all of the following:

28(i) A pension plan of the municipality has unfunded
29actuarial accrued pension liability.

30(ii) All revenue derived from that portion of the

1rate in excess of $52 shall be used solely to defray the
2municipality's unfunded actuarial accrued pension
3liability.

4(iii) The local services tax levied at a rate in
5excess of $52 may not be levied in the same year that the
6income of nonresidents is subject to a tax above maximum
7rates as provided in section 607(f) of the Municipal
8Pension Plan Funding Standard and Recovery Act.

9Section 141. Jurisdiction of court of common pleas.

10(a) Increases in tax rates.--The court of common pleas of
11each county shall have jurisdiction to hear a petition filed by
12a municipality which has adopted a [final] plan pursuant to
13Subchapter C or C.1 of Chapter 2 to increase rates of taxation
14for earned income on residents and nonresidents, real property,
15or both, beyond maximum rates provided by law in accordance with 
16section 123. The court may extend annually the increased taxing
17powers of the municipality until the termination date of the
18plan adopted by the municipality pursuant to Chapter 2.

19(a.1) Levy of payroll preparation tax.--The court of common
20pleas of each county shall have jurisdiction to hear a petition
21filed by a municipality which has adopted a plan pursuant to
22Subchapter C or C.1 of Chapter 2 to levy a payroll preparation
23tax authorized by section 123(c)(1.1).

24(a.2) Increase in local services tax.--The court of common
25pleas of each county shall have jurisdiction to hear a petition
26filed by a municipality which has adopted a plan pursuant to
27Subchapter C or C.1 of Chapter 2 to increase the rate of the
28local services tax in accordance with section <-123(c)(1.1) 123(c)
29(1.2).

30(b) Involuntary compromises of delinquent taxes.--The court

1of common pleas of each county may hear a petition filed by at
2least two taxing authorities having taxing power over the
3properties within a municipality which has adopted a [final]
4plan pursuant to Subchapter C or C.1 of Chapter 2 if the
5petition requests a compromise of delinquent taxes due on a
6property in that municipality. The court may order the property
7to be sold at a sheriff's sale and the proceeds to be divided
8among all authorities which are owed taxes for the property
9sold. If the property is sold at sheriff's sale and if the
10proceeds are insufficient to satisfy tax liens on the property,
11the court shall order a proration of the sale proceeds among the
12taxing authorities which fixed the liens.

13Section 7. The act is amended by adding a chapter to read:

14CHAPTER 1-A

15EARLY INTERVENTION PROGRAM

16SUBCHAPTER A

17PRELIMINARY PROVISIONS

18Section 101-A. Definitions.

19The following words and phrases when used in this chapter
20shall have the meanings given them in this section unless the
21context clearly indicates otherwise:

22"Center." The Governor's Center for Local Government
23Services of the Department of Community and Economic Development
24of the Commonwealth.

25"Keystone Principles." The Keystone Principles and Criteria
26for Growth Investment and Resource Conservation adopted May 31,
272005, by the Economic Development Cabinet to foster and measure
28the effectiveness of sustainable economic development and
29conservation of resources through the investment of Commonwealth
30funds in its municipalities.

1"Program." The Early Intervention Program established by
2this chapter.

3Section 102-A. Program objectives.

4The Early Intervention Program established by this chapter
5provides a municipality with a preemptive step for the purpose
6of seeking guidance and assistance from the Commonwealth to
7develop long-term financial management, administrative, service
8delivery and economic development strategies that the
9municipality can implement to avert a fiscal crisis and provide
10fiscal stability. The specific objectives of the Early
11Intervention Program include the following and are meant to:

12(1) Provide the resources to assist a municipality in
13identifying, prioritizing and addressing the financial
14difficulties confronting it, while ensuring its short-term
15and long-term goals and objectives are adequately taken into
16account.

17(2) Engage in a management review of its operations and
18provide recommendations that will enhance financial
19administration, management and service delivery of a
20municipality.

21(3) Strengthen the ability of a municipality to develop,
22adopt, implement and monitor multiyear financial management
23plans and to incorporate the process into its annual budget
24process.

25(4) Implement a system of multiyear revenue and
26expenditure trend analysis, monitoring and forecasting so
27that a municipality can better anticipate and plan for future
28financial circumstances.

29(5) Promote multimunicipal and regional planning,
30cooperation strategies and cost-sharing opportunities between

1two or more municipalities.

2(6) Support the adoption by a municipality of best
3management practices and efficiency measures to increase the
4financial stability of a municipality.

5(7) Further the integration of sound community and
6economic development strategies to encourage the economic
7growth of the tax base of a municipality over a multiyear
8period.

9SUBCHAPTER B

10ADMINISTRATIVE PROVISIONS

11Section 103-A. Authorization.

12The Early Intervention Program is established to authorize
13the center to provide guidance and assistance through grants to
14a municipality seeking to ensure fiscal stability by developing
15and implementing long-term financial, managerial and economic
16development strategies.

17Section 104-A. Grants.

18(a) General rule.--A grant may be awarded by the center to a
19municipality or two or more municipalities cooperating together
20to ensure fiscal stability through the development and
21implementation of long-term financial, managerial and economic
22development strategies in an amount not exceeding $200,000
23during the first fiscal year that commences on the effective
24date of this section, adjusted for inflation in subsequent years
25by an amount not to exceed an annual cost-of-living adjustment
26calculated by applying the percentage change in the Consumer
27Price Index immediately prior to the date the adjustment is due
28to take effect. To be eligible for a grant for implementation
29funding, a municipality must meet the basic training
30requirements established in guidelines developed by the center.

1(b) Match.--The grant amount is subject to a 50% financial
2match by the municipality to which the grant was provided,
3unless the center determines a match by the municipality of a
4lesser amount not less than 10% is warranted. The center may
5authorize any portion of the municipality's financial match to
6be offset by an in-kind match.

7(c) Eligible activities.--A grant shall be used for the
8following eligible activities:

9(1) The development of multiyear financial management
10plan for a municipality.

11(2) The development of multimunicipal or regional
12intergovernmental cooperation initiatives and cost-sharing
13strategies.

14(3) A study to improve the management and operational
15practices and financial administration procedures of a
16municipality.

17(4) A merger or consolidation feasibility study.

18(5) The implementation of any of the eligible activities
19identified in paragraphs (1) through (4).

20(6) Training and capacity-building activities that meet
21basic requirements established in guidelines developed by the
22center which assist the municipality in the implementation of
23plan recommendations.

24(7) Contracts with professional consultants to develop
25and implement recommendations related to eligible activities.

26(8) An audit, prepared by an independent accountant or
27firm, as required by section 108-A.

28Section 105-A. Application.

29A program application must be submitted by the applicant
30municipality on a form prescribed by the department utilizing

1the electronic single application format and include or
2demonstrate all of the following:

3(1) The name and address of the municipality or, in the
4case of a multimunicipal application, the municipalities.

5(2) The name of a contact person.

6(3) The execution of a supporting resolution authorizing
7the submission of the application and committing the
8resources of the municipality or, in the case of a
9multimunicipal application, municipalities.

10(4) The single application shall be signed by the
11authorized officer of the municipality or, in the case of a
12multimunicipal application, municipalities.

13(5) Any other information required by the department.

14Section 106-A. Evaluation criteria.

15The center shall evaluate a program application on the basis
16of municipal financial characteristics and the quality of the
17proposed program, including the extent to which the program is
18estimated to improve the administrative, operational and
19financial management capacity of the applicant municipality. The
20following factors shall be considered in the evaluation:

21(1) The current and projected financial condition of the
22municipality.

23(2) The economic and demographic condition of the
24municipality.

25(3) The proactive measures the municipality has taken to
26manage its finances in a responsible manner, including
27attempts to reduce expenditures, increase revenues, adopt
28sound management practices, establish municipal priorities
29and adhere to generally accepted financial management, budget
30and financial reporting standards.

1(4) The extent to which the municipality has
2demonstrated its willingness and commitment to engage in a
3multimunicipal or regional strategy and has examined whether
4certain municipal services can be provided through a council
5of governments, a county government or other structure.

6(5) The extent to which the municipality has
7demonstrated its willingness and commitment to improve its
8financial and administrative operation through the adoption
9and implementation of a multiyear financial management plan.

10(6) Where it has received assistance and funding from
11the department, past performance by the municipality.

12(7) Where applicable, the elements of the Keystone
13Principles shall be included as part of the evaluation
14criteria.

15(8) Any other factors the center considers relevant.

16Section 107-A. Award.

17The secretary shall announce by letter applications selected
18for funding. The contact person specified in the application
19shall be sent the offer letter. All funding decisions shall be
20made subject to the availability of funds.

21Section 108-A. Guidelines.

22The department shall establish guidelines consistent with
23this chapter, particularly the program requirements and
24measurements to ensure a municipality is provided with adequate
25guidance. The program shall include a requirement of a financial
26audit of the municipality, prepared by an independent accountant
27or firm, for the fiscal year immediately preceding the
28application for funds under this chapter. The department may
29establish guidelines for the audit, and the requirement may be
30satisfied by any previous audit prepared in accordance with the

1guidelines.

2Section 8. Section 203(c) and (g) of the act, amended June
330, 1992 (P.L.336, No.69), are amended to read:

4Section 203. Procedure for determination.

5* * *

6(c) Investigation.--After receiving the request but before
7the public hearing, the secretary may make an investigation into
8the financial affairs of the municipality. The results of the
9investigation or any study previously conducted by the
10department or with department funds under Chapter 1-A or section
11121 shall be placed in the record of the public hearing.

12* * *

13(g) Appeal.--A determination by the secretary under this 
14[act] section is appealable pursuant to [Title 2 of the 
15Pennsylvania Consolidated Statutes (relating to administrative 
16law and procedure)] 2 Pa.C.S. Ch. 7 Subch. A (relating to 
17judicial review of Commonwealth agency action).

18Section 9. Sections 221(d) and (e), 222 and 223 of the act
19are amended to read:

20Section 221. Designation.

21* * *

22(d) Duties.--The coordinator shall [prepare and administer a
23plan designed to relieve the financial distress of the
24municipality which he has been appointed to serve.]:

25(1) Present, at a public meeting within 45 days of the
26execution of the contract between the department and the
27coordinator, a list of the coordinator's preliminary
28findings, as to the financial condition of municipality. The
29list of findings shall include, but is not limited to, a
30quantification of all operating deficits for the current

1fiscal year and a projection of revenues and operating
2expenses for the next three fiscal years, all outstanding
3debt obligations, the cost and term of all outstanding
4contracts, and other relevant information.

5(2) Solicit, not later than the date of the
6coordinator's presentation described in paragraph (1),
7comments in writing relating to the issues associated with
8the municipality's distress from such persons and entities
9who:

10(i) have participated in the early intervention
11process;

12(ii) have provided consultation on behalf of the
13municipality relating to the issues associated with its
14distress; or

15(iii) are elected officials or employees of the
16municipality or labor organizations representing
17employees of the municipality.

18(3) Consider all comments submitted within 30 days of
19the coordinator's presentation described in paragraph (1)
20before preparing and administering a plan designed to relieve
21the financial distress of the municipality which the
22coordinator has been appointed to serve.

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

24(1) Apply for grants and loans pursuant to Chapter 3, as
25[he] the coordinator deems necessary.

26(2) Investigate the tax-exempt status of any property
27within a distressed municipality and advise the governing
28body of the municipality to appeal the assessment or exempt
29status of property within the distressed municipality.

30(3) Solicit and negotiate payments in lieu of taxes from

1institutions of public charity and other tax-exempt property
2owners in the municipality and recommend action by the
3municipality.

4Section 222. Access to information.

5(a) General rule.--The coordinator shall have full access to
6all municipal records.

7(b) Enforcement where records in possession of official or 
8public employee.--If the coordinator believes that an official
9or employee of the municipality or an authority is not answering
10questions accurately or completely or is not furnishing
11information requested, the coordinator may notify the official
12or employee in writing to furnish answers to questions or to
13furnish documents or records, or both. If the official or
14employee refuses, the coordinator may seek a subpoena in the
15court of common pleas to compel testimony and furnish records
16and documents. An action in mandamus shall lie to enforce the
17provisions of this section.

18(c) Enforcement where records in possession of other
19persons.--If the coordinator believes that a person is not
20furnishing information related to municipal records and that
21person is not subject to subsection (b), the coordinator may
22seek a subpoena in the court of common pleas to compel testimony
23and furnish records and documents.

24Section 223. Public and private meetings.

25(a) Public meetings authorized.--The coordinator may hold
26public meetings as defined in [the act of July 3, 1986 (P.L.388, 
27No.84), known as the Sunshine Act] 65 Pa.C.S. Ch. 7 (relating to 
28open meetings), in connection with plan preparation.

29(b) Private meetings authorized.--Notwithstanding the
30provisions of [the Sunshine Act] 65 Pa.C.S. Ch. 7, private

1negotiation sessions may be conducted by the coordinator between
2the municipality and the individual creditors in an effort to
3obtain the consent of each creditor to the proposed adjustment
4and handling of specific claims against the municipality.

5Section 10. The act is amended by adding a section to read:

6Section 224.1. Performance of coordinator.

7(a) Review of coordinator.--Beginning on July 1, 2015, the
8secretary, or his designee, shall conduct an annual review of
9each coordinator appointed under section 221 to assess whether:

10(1) The coordinator's performance has been in compliance 
11with the requirements of the coordinator's contract, if any,
12and the provisions of this act.

13(2) The coordinator has been ineffective in providing
14assistance necessary to develop and implement the plan.

15(b) Termination of coordinator.--An unfavorable review under
16this section may constitute grounds for termination of the
17coordinator's contract.

18Section 11. Section 241 of the act, amended or added June
1930, 1992 (P.L.336, No. 69) and July 5, 2012 (P.L.1104, No.133)
20and repealed in part October 13, 1994 (P.L.596, No.90), is
21amended to read:

22Section 241. Contents.

23A plan formulated by the appointed coordinator shall be
24consistent with applicable law and shall include any of the
25following factors which are relevant to alleviating the
26financially distressed status of the municipality:

27(1) Projections of revenues and expenditures for the
28current year and the next [three] five years, both assuming
29the continuation of present operations and as impacted by the
30measures in the plan. The projections must include an
 

1itemization of the following:

2(i) Projected revenues, including:

3(A) Local taxes.

4(B) Licenses, permits and fines.

5(C) Sales and rentals.

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

7(E) Any other sources of projected revenue.

8(ii) Projected expenditures, including:

9(A) Debt service.

10(B) Workforce.

11(C) Elected and executive officials.

12(D) Financial management.

13(E) Infrastructure costs, including highways,
14roads and wastewater systems.

15(F) Maintenance costs, including recycling and
16trash collection, disposal and removal.

17(G) Other professional services.

18(H) Public safety.

19(I) Community and economic development.

20(J) Any other applicable expenditures.

21(2) Recommendations which will:

22(i) Satisfy judgments, past due accounts payable,
23and past due and payable payroll and fringe benefits.

24(ii) Eliminate deficits and deficit funds.

25(iii) Restore to special fund accounts money from
26those accounts that was used for purposes other than
27those specifically authorized.

28(iv) Balance the budget, avoid future deficits in
29funds and maintain current payments of payroll, [fringe]
30benefits and accounts through possible revenue

1enhancement recommendations, including tax or fee
2changes.

3(v) Avoid a fiscal emergency condition in the
4future.

5(vi) Enhance the ability of the municipality to
6negotiate new general obligation bonds, lease rental
7debt, funded debt and tax and revenue anticipation
8borrowing.

9(vii) Consider changes in accounting and automation
10procedures for the financial benefit of the municipality.

11(viii) Propose a reduction of debt due on specific
12claims by an amortized or lump-sum payment considered to
13be the most reasonable disposition of each claim possible
14for the municipality considering the totality of
15circumstances.

16(3) Possible changes in collective bargaining agreements
17and permanent and temporary staffing level changes or changes
18in organization.

19(4) Recommended changes in municipal ordinances or
20rules.

21(5) Recommendations for special audits or further
22studies.

23(6) An analysis of whether conditions set forth in
24section 261 exist, whether specific exclusive Federal
25remedies could help relieve the municipality's financial
26distress and whether filing a Federal debt adjustment action
27under Subchapter D is deemed to be appropriate.

28[(7) An analysis of whether the economic conditions of
29the municipality are so severe that it is reasonable to
30conclude that the municipality is no longer viable and should

1consolidate or merge with an adjacent municipality or
2municipalities.]

3(7.1) An analysis of whether the economic conditions
4within the municipality are so severe that it is no longer
5viable and should consolidate or merge with an adjacent
6municipality or municipalities in accordance with 53 Pa.C.S.
7Ch. 7 (relating to alteration of territory or corporate
8entity and dissolution) or disincorporate in accordance with
9Chapter 4.

10(8) An analysis of whether functional consolidation of
11or privatization of existing municipal services is
12appropriate and feasible and recommendations for where and
13how this could be done.

14(9) A capital budget which addresses infrastructure
15deficiencies.

16(10) Recommendations for greater use of Commonwealth
17economic and community development programs.

18(10.1) Recommendations for enhanced cooperation and
19changes in land use planning and zoning, including regional
20approaches that would promote economic development and
21improve residential, commercial and industrial use
22availability within and around the municipality.

23(11) Notwithstanding any other provision of law, limits
24on projected expenditures for individual collective
25bargaining units that may not be exceeded by the distressed
26municipality, giving due consideration to the projection of
27revenue and expenses under paragraph (1).

28(12) An analysis of current revenue sources and
29recommendation to modify revenue sources, including the
30subjects and rates of taxation of the distressed municipality

1in accordance with section 123. Recommendations relating to a
2modification of revenue sources shall be made with
3consideration to the effect on economic development,
4employment and an equitable distribution of tax burden. The
5analysis and recommendations shall be presented to the court
6in any proceeding under section 123. The analysis shall
7address:

8(i) The tax bases of current and recommended revenue
9sources from both within and outside of the distressed
10municipality.

11(ii) Collection rates, methods and costs of existing
12and, to the extent possible, proposed revenue sources and
13tax collection.

14(iii) The current fee, charge, penalty and fine
15provisions of municipal enactments related to municipal
16services and police powers.

17(iv) Revenue as defined in section 103.

18Section 12. Section 242(a) of the act, amended December 19,
191988 (P.L.1272, No.157), is amended and the section is amended
20by adding a subsection to read:

21Section 242. Publication.

22(a) Filing.--Within [90] 120 days of an executed contract
23between the department and the coordinator, the coordinator
24shall formulate a plan for relieving the municipality's
25financial distress and shall deliver true and correct copies of
26it to:

27(1) The municipal clerk or municipal secretary, who
28shall immediately place the copy on file for public
29inspection in the municipal office.

30(2) The secretary.

1(3) Each member of the municipal governing body.

2(4) The mayor.

3(5) The chief financial officer of the municipality.

4(6) The solicitor of the municipal governing body.

5(7) All parties who have petitioned the secretary under
6section 203.

7* * *

8(c.1) Solicitation of comments.--The coordinator shall, no
9later than the date of filing, solicit comments on the
10coordinator's plan to be presented at the public meeting from
11such persons and entities which submitted timely comments under
12section 221(d)(2).

13* * *

14Section 13. Section 245 of the act, amended December 19,
151988 (P.L.1272, No.157), is amended to read:

16Section 245. Adoption by municipality.

17Not later than 25 days following the coordinator's public
18meeting, the municipal governing body shall either enact an
19ordinance approving the implementation of the plan, including
20enactment of necessary related ordinances and revisions to
21ordinances, or shall reject the plan and proceed under section
22246. If the ordinance takes effect in a municipality operating
23under an optional plan form of government or a home rule
24charter, the chief executive officer [may] shall issue an order
25directing the implementation of the plan no later than seven
26days from the enactment of the ordinance by the governing body.

27Section 14. Section 246(d)(3) of the act is amended to read:

28Section 246. Preparation and action on alternate plan.

29* * *

30(d) Review by secretary.--

1* * *

2(3) If the secretary is of the opinion that the plan,
3when implemented, will not overcome the municipality's
4financial problems, the secretary shall inform the
5municipality of the following:

6(i) The secretary's determination.

7(ii) The reasons for the determination.

8(iii) The applicability of sections 251 and 264 to
9the municipality.

10(iv) The applicability of Chapters 6 and 7 to the
11municipality.

12Section 15. Section 247(a)(4) of the act, amended June 30,
131992 (P.L.336, No.69), is amended to read:

14Section 247. Plan implementation.

15(a) Coordinator's plan.--If the coordinator's plan is
16adopted by the municipal governing body, the coordinator shall
17be charged with implementing his plan and shall:

18* * *

19(4) Terminate the plan upon its completion in accordance 
20with Subchapter C.1.

21* * *

22Section 16. The act is amended by adding a section to read:

23Section 247.1. Annual budget.

24(a) Proposed budget.--Notwithstanding any provision of law
25or home rule charter to the contrary, a municipality subject to
26a plan under this chapter shall, at least 120 days prior to the
27end of its current fiscal year, commence development of a
28proposed annual budget for the next fiscal year that implements
29the provisions of the plan or makes other changes to the
30management of the municipality necessary to implement the

1provisions of the plan. The proposed budget shall be prepared by
2the governing body or the chief executive officer, as the case
3may be.

4(b) Coordinator review.--At least 75 days prior to the end
5of the fiscal year, the governing body or chief executive
6officer shall submit the proposed budget to the coordinator. The
7coordinator shall review the proposed budget to verify that the
8proposed budget conforms with the plan. The coordinator shall
9make any modifications necessary to the proposed budget to meet
10the objectives of the plan.

11(c) Return of proposed budget.--After completion of the
12coordinator's review, the coordinator shall, at least 45 days
13before the end of the municipality's fiscal year, submit the
14proposed budget, together with the coordinator's modifications,
15if any, to the municipality for adoption in accordance with law.

16(d) Notification to secretary.--Within 30 days of the
17municipality's adoption of the budget, or the municipality's
18failure to timely adopt a budget, the coordinator shall notify
19the secretary whether or not the adopted budget, if any,
20conforms to the plan. Upon a determination that the budget does
21not conform to the plan, or that the municipality has not timely
22adopted a budget, the secretary may take action as provided for
23by this act.

24Section 17. Sections 248 and 250 of the act are amended to
25read:

26Section 248. Failure to adopt or implement plan.

27If no plan is adopted or implemented pursuant to this
28chapter, then sections 251 and 264 shall apply[.] and, upon a 
29written recommendation of the coordinator, the secretary may 
30request a determination of a fiscal emergency in accordance with
 

1Chapter 6.

2Section 250. Debt provisions.

3Adoption of a plan in accordance with this subchapter and 
4Subchapter C.1 by ordinance is a condition precedent for the
5approval of long-term debt or funding debt under [the act of
6July 12, 1972 (P.L.781, No.185), known as the Local Government
7Unit Debt Act] 53 Pa.C.S. Pt. VII Subpt. B (relating to 
8indebtedness and borrowing). A debt financing provision of the
9plan may be waived by agreement of the lender and the
10municipality; but any such waiving must be expressly set forth
11in the indenture or contract securing the debt.

12Section 18. Section 253 of the act is repealed:

13[Section 253. Termination of status.

14(a) Determination by secretary.--Following a duly advertised
15public hearing with notices given as provided in section 203,
16the secretary may issue a determination that the conditions
17which led to the earlier determination of municipal financial
18distress are no longer present. The determination shall rescind
19the status of municipal financial distress and shall include a
20statement of facts as part of the final order.

21(b) Determination upon petition by a municipality.--A
22financially distressed municipality may petition the secretary
23to make a determination that the conditions which led to the
24earlier determination of municipal financial distress are no
25longer present. Upon receiving the petition, the secretary may
26issue a determination to rescind following a duly advertised
27public hearing with notices given as provided in section 203.

28(c) Factors to consider.--In determining whether the
29conditions which led to the earlier determination of municipal
30financial distress are no longer present, the secretary shall

1consider that:

2(1) Monthly reports submitted by the coordinator to the
3department under section 247(a)(3) indicate that termination
4of the status of municipal financial distress is appropriate.

5(2) Accrued deficits in the municipality have been
6eliminated.

7(3) Obligations issued to finance all or part of the
8municipality's deficit have been retired.

9(4) The municipality has operated, for a period of at
10least one year, under a positive current operating fund
11balance or equity, as evidenced by the municipality's audited
12financial statements prepared in accordance with generally
13accepted accounting principles.]

14Section 19. The act is amended by adding a subchapter to
15read:

16SUBCHAPTER C.1

17DURATION OF DISTRESSED STATUS

18Section 254. Limitation of status.

19(a) Termination date.--

20(1) Except as otherwise provided in this subchapter, no
21municipality shall be subject to the provisions of this act
22after five years from the effective date of an ordinance
23enacted in accordance with section 245 or 246. No amendment
24to a plan shall affect the termination date as determined
25from the date of enactment of the original ordinance.

26(2) Nothing in this section shall be construed to:

27(i) prohibit a municipality from participating in an
28early intervention program as provided in Chapter 1-A or
29reentering distressed status in accordance with this act
30after a termination of status in accordance with this

1subchapter.

2(ii) Prohibit termination of status proceedings in
3accordance with section 255.1 prior to the termination
4date as provided in this section.

5(b) Distressed municipalities.--

6(1) Municipalities operating pursuant to a recovery plan
7on the effective date of this section shall be subject to a
8termination date five years from the effective date of the
9most recent recovery plan or amendment enacted in accordance
10with this act, provided, however, that municipalities subject
11to a plan that will remain in effect for one year or less on
12the effective date of this subsection shall be subject to a
13termination date three years from the termination date of the
14current plan or plan amendment.

15(2) If its distressed status has not been rescinded or
16has been continued in accordance with section 710.1, a
17municipality operating under Chapter 7 shall be subject to a
18final termination date no more than five years from the
19termination date of receivership. Section 255 shall not apply
20to a termination of status under this paragraph.

21Section 255. Coordinator's report.

22(a) General rule.--Not later than 180 days after the
23beginning of the final year of distressed status as determined
24in accordance with section 254(a) and (b)(1), the coordinator
25shall complete a report stating the financial condition of the
26municipality and include one of the following findings:

27(1) Conditions within the municipality warrant a
28termination in status in accordance with section 255.1. A
29report containing a recommendation under this paragraph shall
30address each of the factors set forth in section 255.1(c).

1(2) Conditions are such that the municipality should be
2disincorporated in accordance with Chapter 4.

3(3) Conditions are such that the secretary should
4request a determination of a fiscal emergency in accordance
5with Chapter 6.

6(4) A three-year exit plan in accordance with section
7256 is warranted.

8(b) Filing and notice.--

9(1) The report shall be filed with the same parties as
10provided in section 242(a). The date of filing shall be the
11date on which the municipal clerk or municipal secretary
12places a true and correct copy of the report on file for
13public inspection in the municipal office.

14(2) On the date of filing, notice that the report has
15been filed and is open for public inspection in the municipal
16office shall be published by the coordinator in the county
17legal reporter and in one or more newspapers with general
18circulation serving the area in which the municipality is
19located. The department shall pay for the cost of the
20publication of the notice. The notice shall contain the
21following information:

22(i) A statement that a report regarding the status
23of the municipality's financial distress was filed
24pursuant to this act.

25(ii) The date and place of filing.

26(iii) A statement that the public has 15 days from
27the date of filing in which to file written comments on
28the report.

29(iv) The name and address of the coordinator to whom
30written comments should be sent.

1(v) A summary of the report and findings of the
2coordinator.

3(vi) The date and place of a public meeting to
4receive comments on the report.

5(c) Written comments.--Written comments on the report may be
6filed with the coordinator. Written comments shall be made no
7later than 15 days after the date of filing. Written comments
8judged by the coordinator to have value to the plan may be used
9to develop a revised report.

10(d) Public meeting.--A meeting conducted by the coordinator
11in the municipality shall be set for a date not later than 20
12days after the date of filing the report. The coordinator shall
13request in writing that the chief executive officer, each member
14of the municipal governing body and the chief financial officer
15of the municipality be present at the coordinator's meeting.
16Comments on the plan shall be received by the coordinator at
17that time. The coordinator has the discretion whether to
18consider comments made on the report.

19(e) Revision of report.--

20(1) Nothing in this section shall be construed to
21preclude the coordinator from revising a report of his own
22initiative.

23(2) Neither the secretary nor the chief executive
24officer or the governing body, as appropriate, may revise the
25coordinator's report.

26(3) If the coordinator decides to revise the report, the
27coordinator shall consult with the secretary and either the
28chief executive officer or the governing body throughout the
29revision of the report and shall give consideration to
30comments they may propose.

1(4) A revised report shall be completed and delivered to
2each party cited in section 242(a) within ten days from the
3date of the coordinator's public meeting on the original
4report.

5Section 255.1. Termination of status.

6(a) Public hearing.--Within 30 days of the date for the
7filing of a final report containing a finding as provided in
8section 255(a)(1) the secretary shall conduct a public hearing,
9advertised with notices given as provided in section 203.

10(b) Determination.--Within 90 days of the conclusion of the
11public hearing, the secretary shall issue an administrative
12determination of whether the termination of status is
13appropriate and reasons for the determination. The determination
14shall include findings addressing each of the factors in
15subsection (c) and shall consider information provided in the
16report of the coordinator and any additional information
17received during the public hearing.

18(c) Factors to consider.--If the secretary concludes that
19substantial evidence supports an affirmative determination for
20each of the following factors, the determination shall be that
21distressed status will be rescinded. The secretary shall
22consider whether:

23(1) Operational deficits of the municipality have been
24eliminated and the financial condition of the municipality,
25as evidenced by audited financial statements prepared in
26accordance with generally accepted accounting principles and
27projections of future revenues and expenditures, demonstrates
28a reasonable probability of future balanced budgets absent
29participation in this act.

30(2) Obligations issued to finance the municipality's

1debt have been retired, reduced or reissued in a manner that
2has adequately refinanced outstanding principle and interest
3and has permitted timely debt service and reasonable
4probability of continued timely debt service absent
5participation in this act.

6(3) The municipality has negotiated and resolved all
7claims or judgments that would have placed the municipality
8in imminent jeopardy of financial default.

9(4) The reasonably projected revenues of the
10municipality are sufficient to fund ongoing necessary
11expenditures, including pension and debt obligations and the
12continuation or negotiation of collective bargaining
13agreements and the provision of municipal services.
14Projections of revenues shall include any anticipated tax or
15fee increases to fund ongoing expenditures for the first five
16years after a termination of distressed status.

17(d) Appeal.--The determination of the secretary may be
18appealed pursuant to 2 Pa.C.S. Ch. 7 Subch. A (relating to
19judicial review of Commonwealth agency action) by any of the 
20following:

21(1) The governing body of the municipality.

22(2) A creditor of the municipality.

23(3) Ten percent of the number of electors of the
24municipality that voted at the last municipal election.

25(4) Ten percent of the beneficiaries of a pension fund
26of the municipality.

27(5) Ten percent of the employees of the municipality.

28(6) Trustees or paying agents of a municipal bond
29indenture.

30(7) Elected auditors, elected controllers or appointed

1independent auditors.

2(8) A trustee of the Municipal Pension Fund.

3(9) The chief executive officer of any city.

4(10) A labor organization that is a party to a
5collective bargaining agreement with the municipality.

6(e) Suspension of subsequent proceedings.--The coordinator
7and secretary shall not take any action under sections 256 and
8257 until a final decision is issued for any appeal under
9subsection (d) or (f). The duration of distressed status of the
10municipality shall be extended subject to subsequent action in
11accordance with section 257.

12(f) Action of the secretary preserved.--Except as otherwise
13provided in chapters 6 and 7, the secretary may, following a
14duly advertised public hearing with notices given as provided in
15section 203, at any time issue a determination as provided in
16this section upon written recommendation of the coordinator
17setting forth a discussion of each of the factors specified in
18subsection (c). The determination may be appealed in accordance
19with subsection (d).

20Section 256. Exit plan.

21(a) General rule.--If recommended in a final report under
22section 255, the coordinator shall within 90 days of the public
23meeting referred to in section 255 or the filing of the final
24report under section 255(e)(4), whichever is later, prepare an
25exit plan for the municipality. The exit plan shall be subject
26to the same filing, notice, public meeting and revision
27procedures as specified in section 255.

28(b) Contents of exit plan.--The exit plan prepared by the
29coordinator shall contain such elements as may be necessary to
30ensure termination of distressed status after three years,

1including, but not limited to:

2(1) The sale, lease, conveyance, assignment or other use
3or disposition of the assets of the distressed municipality.

4(2) Functional consolidation of or privatization of
5existing municipal services.

6(3) The execution, approval, modification, rejection,
7renegotiation or termination of contracts or agreements of
8the distressed municipality, provided, however, that the
9provisions of section 252 shall apply to any exit plan
10adopted in accordance with this subchapter.

11(4) Changes in the form of municipal government or the
12configuration of elected or appointed municipal officials and
13employees as permitted by law.

14(c) Adoption of plan.--

15(1) Not later than 45 days following the coordinator's
16public meeting to hear comments on the exit plan, the
17municipal governing body shall enact an ordinance approving
18the implementation of the plan, including enactment of
19necessary related ordinances and revisions to ordinances.

20(2) If the ordinance takes effect in a municipality
21operating under an optional plan form of government or a home
22rule charter, the chief executive officer shall issue an
23order directing the implementation of the plan no later than
24seven days from the enactment of the ordinance by the
25governing body.

26(3) If the governing body fails to adopt and implement
27the plan, the secretary shall, upon a written determination
28by the coordinator, request that the Governor make a
29determination of a fiscal emergency in accordance with
30Chapter 6.

1(4) The requirements of this subsection shall be
2suspended if the coordinator first provides a recommendation
3to the secretary that the municipality should be
4disincorporated under Chapter 4.

5Section 257. Postreport procedures.

6(a) Five-year procedures.--The secretary shall, upon written
7recommendation from the coordinator and after filing a final
8report under section 255, take one of the following actions:

9(1) Terminate the distressed status of the municipality
10effective 90 days after a determination or final decision
11requiring termination of status as provided in section 255.1.

12(2) After filing a final report containing a
13recommendation under section 255(a)(2), terminate the
14distressed status of the municipality effective on the date
15of a final order establishing an unincorporated district
16under Chapter 4.

17(3) After filing a final report containing a
18recommendation under section 255(a)(3), request a
19determination of a fiscal emergency in accordance with
20Chapter 6.

21(b) Exit plan procedures.--The secretary may, after the
22adoption of a plan under section 256(c) and upon written
23recommendation of the coordinator:

24(1) issue a determination in accordance with section
25255.1; or

26(2) request a determination of a fiscal emergency in
27accordance with Chapter 6.

28(c) Postexit plan procedures.--If three years have elapsed
29since the adoption of an exit plan without a recommendation as
30provided in subsection (b), the secretary shall terminate the

1distressed status of the municipality.

2Section 20. Section 261(a)(4) of the act, amended July 5, 
32012 (P.L.1104, No.133), is amended and the section is amended 
4by adding a subsection to read:

5Section 261. Filing municipal debt adjustment under Federal
6law.

7(a) [Authorization.--In the event one of the following
8conditions is present, a] General authorization.--A municipality
9is hereby authorized to apply to the department to file a
10municipal debt adjustment action pursuant to the Bankruptcy Code
11(11 U.S.C. § 101 et seq.), if at least one of the following 
12conditions is present:

13* * *

14[(4) A majority of the current or immediately preceding
15governing body of a municipality determined to be financially
16distressed has failed to adopt a plan or to carry out the
17recommendations of the coordinator pursuant to this act.]

18(a.1) Filing after determination of distress.--The
19municipality's authorization under subsection (a) shall continue
20after the issuance of a declaration of distress under section
21203, so long as the municipality is not in a state of fiscal
22emergency pursuant to a declaration under section 602. A
23municipality that is in a state of fiscal emergency shall not be
24authorized under subsection (a) to apply to the department to
25file a municipal debt adjustment.

26* * *

27Section 21. Section 281 of the act, added June 30, 1992
28(P.L.336, No.69), is amended to read:

29Section 281. Eligibility.

30If a municipality has been determined to be distressed under

1section 203(f) and is not subject to funding restrictions under
2section 251 or 264, it shall be eligible for economic and
3community development assistance as provided in section 282.
4Merger or consolidation [under Chapter 4] of a distressed
5municipality with a municipality may not be deemed to diminish
6the successor municipality's eligibility or priority status for
7economic assistance under this chapter.

8Section 22. Section 282(b) of the act, added June 30, 1992
9(P.L.336, No.69), is amended and the section is amended by
10adding a subsection to read:

11Section 282. Priority.

12* * *

13(b) Releases of funds.--Funds granted to a distressed
14municipality shall only be released upon concurrence by the
15coordinator or receiver that the program to be funded is
16consistent with efforts to alleviate the financially distressed
17status of the municipality as provided in this act.

18(b.1) Release of funds to unincorporated district.--Funds
19granted to an unincorporated district shall be released to the
20administrator in accordance with section 441.

21* * *

22Section 23. Chapter 4 heading of the act is amended to read:

23CHAPTER 4

24[CONSOLIDATION OR MERGER OF] ECONOMICALLY NONVIABLE

25MUNICIPALITIES

26Section 24. Chapter 4 of the act is amended by adding
27subchapters to read:

28SUBCHAPTER C

29DISINCORPORATION OF NONVIABLE MUNICIPALITIES

30Section 431. Definitions

1The following words and phrases when used in this subchapter
2shall have the meanings given to them in this section unless the
3context clearly indicates otherwise:

4"Administrator." A service district administrator appointed
5pursuant to section 434.

6"District." An unincorporated service district created by
7section 441.

8"District advisory committee." A service district advisory
9committee established by section 442.

10"Governing standards." Provisions within an essential
11services plan providing for certain conduct of residents and
12property owners as provided by section 436(c).

13"Municipality." A county, city, borough, incorporated town,
14township or home rule municipality that does not provide police
15service or fire service through its employees. The term does not
16include a city of the first class.

17"Restricted Account." An account established in the State
18Treasury as provided by section 445.1.

19Section 431.1. Determination of nonviability.

20(a) General rule.--Upon recommendation of a coordinator
21appointed under Chapter 2 or a receiver appointed under Chapter
227, the secretary shall consider whether all of the following
23conditions have been met in determining that a municipality is
24nonviable:

25(1) The municipality is unable to function as a general
26purpose unit of government to provide essential services to
27its residents and property owners.

28(2) The municipality has experienced such deteriorated
29economic conditions and a collapse of its tax base that all
30reasonable efforts to restore economic viability have failed.

1(3) Efforts to merge or consolidate the municipality
2with a neighboring municipality are unachievable or will not
3result in viability.

4(b) Notice and recommendation.--If the secretary determines
5that a municipality is nonviable under all of the conditions
6provided in subsection (a), the secretary shall provide notice
7to the governing body of the municipality of the secretary's
8determination and recommend that the municipality be
9disincorporated under this subchapter.

10Section 432. Procedure for disincorporation.

11(a) Ordinance.--Within 45 days of a determination of
12nonviability under section 431.1, the governing body may enact
13an ordinance, subject to review by the court of common pleas
14under section 433, that will initiate the disincorporation of
15the municipality. The ordinance shall be advertised as required
16by law but it may not become effective until the court has
17issued its decree under section 433.

18(b) Petition by electors.--If the governing body of the
19municipality fails to pass an ordinance authorized under
20subsection (a), then a petition signed by registered electors of
21the municipality comprising at least 51% of the number of
22electors voting for the office of Governor in the last
23gubernatorial general election may be submitted to the court
24within 60 days of the failure of the governing body to enact an
25ordinance as provided in subsection (a).

26Section 433. Judicial review of ordinance or petition.

27(a) Filing and notice.--Upon presentation to the court of
28the filing of an ordinance under section 432(a) or a petition
29under section 432(b), the court shall direct the prothonotary to
30give notice of the filing of the ordinance or petition in a

1newspaper of general circulation in the county where the
2municipality is located once a week for four consecutive weeks
3and once in the county legal journal, if any, during the four-
4week period. The notice shall provide the date the ordinance or
5petition was filed and specify that exceptions to the ordinance
6or petition may be filed within 45 days of the date of the
7filing of the ordinance or petition by any of the following:

8(1) the governing body of the municipality;

9(2) a taxpayer of the municipality;

10(3) any creditor or bondholder of the municipality; or

11(4) any collective bargaining unit or contractor of the
12municipality.

13(b) Notice of hearing.--No later than 60 days after the date
14of the filing of the ordinance or petition, the court shall
15conduct a hearing on the ordinance or petition and exceptions
16filed thereto. Notice of the hearing shall be provided by the
17court to those receiving notice under subsection (a) and to all
18other parties that have filed exceptions in accordance with
19subsection (a).

20(c) Hearing proceedings.--

21(1) The governing body of the municipality and all other
22individuals and entities which have filed exceptions under
23subsection (a) shall be parties to the proceedings and shall
24be entitled to present testimony or other evidence relevant
25to the nonviability of the municipality or relevant to
26exceptions timely filed, provided that the court, in its
27discretion, may consolidate testimony related to similar
28exceptions.

29(2) The coordinator or receiver, or another designee of
30the secretary, shall testify about the progress of the

1municipality under the adopted recovery plan under Chapter 2
2or plan adopted under Chapter 7 and render an opinion
3regarding the viability of the municipality.

4(3) The court may examine pertinent financial
5information and any audits prepared by a certified public
6accountant of the municipality and receive additional
7evidence relevant to the matter, including, but not limited
8to, evidence relating to:

9(i) The effect of disincorporation, including
10provisions for services that would be continued to be
11provided to residents and property owners of the proposed
12disincorporated area.

13(ii) Additional plans, proceedings or strategies
14that could ensure that the municipality remain viable.

15(iii) The effect of the disincorporation on any
16bonds, other obligations or agreements of the
17municipality.

18(d) Costs and fees.--Court costs and filing fees associated
19with proceedings under this subchapter shall be paid by the
20department.

21(e) Judicial decree.--

22(1) The court shall issue a decree approving the
23validity of the ordinance or granting the petition unless it
24finds, by clear and convincing evidence, that the
25municipality should continue to exist as a separate municipal
26corporation because of a reasonable expectation that the
27municipality is viable.

28(2) Upon issuance of the judicial decree, the department
29and governing body of the municipality shall engage in the
30duties required by this subchapter to prepare for

1disincorporation. The disincorporation shall take effect upon
2the execution of disincorporation under section 439.

3Section 433.1. Failure to initiate disincorporation.

4(a) Conditions prior to determination.--The secretary shall
5issue a determination under subsection (b) within 30 days of
6either:

7(1) the final day for filing a petition under section
8432(b), if judicial review under section 433 has not been
9initiated; or

10(2) a final adjudication pursuant to a hearing held
11under section 433 finding that the municipality should
12continue to exist as a separate municipal corporation because
13of a reasonable expectation that the municipality is viable.

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

15(1) the recovery plan for the municipality shall remain
16in effect subject to the limitations of chapter 2, subchapter
17C.1 and, if the coordinator has previously issued a report
18pursuant to section 255, the secretary shall direct the
19coordinator to prepare an exit plan according to section 256;

20(2) the elected and appointed officials of the
21municipality have demonstrated a failure to adequately
22implement recovery measures and, if so, request a
23determination of a fiscal emergency in accordance with
24Chapter 6;

25(3) conditions within the municipality warrant a
26termination in status in accordance with section 255.1; or

27(4) conditions as set forth in section 261 exist and, if
28so, that the governing body should initiate proceedings for
29federal debt readjustment under Subchapter D of Chapter 2.

30Section 434. Service district administrator.

1(a) Appointment.--No later than 30 days following a decree
2of the court of common pleas under section 433(e), the secretary
3shall appoint a service district administrator. The
4administrator must have a minimum of five years' experience and
5demonstrable expertise in business, financial or State or local
6budgetary matters and be a resident of this Commonwealth for at
7least one year prior to appointment.

8(b) Compensation and expenses.--The administrator's
9compensation and reimbursement for actual and necessary expenses
10shall be paid by the Commonwealth. The date and amount of
11compensation shall be established by the secretary. The
12department may require the compensation and expenses of the
13administrator to be reimbursed by an assessment for
14administrative costs under Subchapter D.

15(c) Revocation and vacancy.--The secretary may the elected
16and appointed officials of the revoke the appointment of an
17administrator at any time. A vacancy in the office of the
18administrator by way of revocation or resignation shall be
19filled in the same manner as the original appointment.

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

21(1) Seek or hold a position as any other elected or
22appointed public official within this Commonwealth or as a
23political party officer during the term of the
24administrator's tenure.

25(2) Seek election as a public official or political
26party officer for one year after the person's service as
27administrator has ended.

28(3) Engage in any conduct prohibited by the act of July
2919, 1957 (P.L.1017, No.451), known as the State Adverse
30Interest Act, or 65 Pa.C.S. Ch. 11 (relating to ethics

1standards and financial disclosure).

2(e) Liability.--

3(1) The administrator shall not be liable personally for
4any obligations of the municipality or unincorporated service
5district.

6(2) It is declared to be the intent of the General
7Assembly that the administrator shall enjoy sovereign and
8official immunity as provided in 1 Pa.C.S. § 2310 (relating
9to sovereign immunity reaffirmed; specific waiver) and shall
10remain immune from suit except as provided by and subject to
11the provisions of 42 Pa.C.S. Ch. 85 Subchs. A (relating to
12general provisions) and B (relating to actions against
13Commonwealth parties).

14(f) Powers and duties.--Notwithstanding any other provision
15of law, the administrator shall have the following powers and
16duties:

17(1) To require the municipality to take actions
18necessary for disincorporation under section 439, including:

19(i) The sale, conveyance, assignment or other use or
20disposition of the municipality's assets as provided by
21law.

22(ii) The repayment of debt, bonds or other
23obligations before disincorporation.

24(iii) Any other action necessary to implement the
25disincorporation.

26(2) To seek a writ of mandamus against the governing
27body to carry out this subchapter.

28(3) To identify essential services which should be
29provided to the residents and property owners of the district
30after the municipality is disincorporated.

1(4) To approve, disapprove, modify, reject, terminate or
2renegotiate contracts and agreements to provide services to
3the residents and property owners of the district.

4(5) To deposit all funds collected to administer
5Subchapter D in the municipality's restricted account and to
6requisition moneys from the restricted account.

7(6) To apply for grants, loans or payments under any
8economic and community development program funded by the
9Commonwealth.

10(7) To establish fees which may be assessed to fund
11essential services provided by contract or intergovernmental
12cooperation agreements under Subchapter D.

13(8) To meet and consult with the municipal governing
14body before disincorporation and the district advisory
15committee after the establishment of the district.

16(9) To meet and consult with county officials to
17prevent, abate and mediate blight as permissible by law.

18(10) To contract for professional services to aid in the
19administrator's duties under this subchapter and Subchapter
20D.

21(11) To seek enforcement of any provision of this
22subchapter and Subchapter D.

23(12) To seek invalidation of any act by the governing
24body of the municipality in conflict with the administrator's
25essential services plan.

26Section 435. Powers and duties of municipality.

27(a) General rule.--After the review of the court of common
28pleas resulting in a decree under section 433(e), but not less
29than 30 days before the date set by the administrator for
30disincorporation to take effect, the governing body of the

1municipality shall:

2(1) Enact a budget in the municipality's projected final
3year that funds the municipality's functions until the date
4of disincorporation and provides for the payment of every
5current obligation of the municipality before the date of
6disincorporation. All remaining municipal funds as of the
7date of disincorporation shall be transferred to the
8municipality's restricted account.

9(2) Provide for the transfer and administration of any
10municipal pension obligation to a private or public pension
11fund. Nothing in this paragraph shall be construed to
12authorize a modification of the pension benefits due to any
13current or past employee of the municipality.

14(3) Provide for the appointment of the district advisory
15committee to assist the administrator after the
16disincorporation of the municipality.

17(b) Corporate powers reserved.--After the review of the
18court of common pleas resulting in a decree under section 433(e)
19until the date of disincorporation, the governing body shall
20retain all corporate powers otherwise authorized by law, except
21that it shall not take any action inconsistent with the
22administrator's plan for disincorporation.

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

24(1) The governing body of the municipality may adopt
25recommended governing standards which may be included by the
26administrator in the essential services plan as the governing
27standards of the district.

28(2) If the governing body adopts recommended governing
29standards, the following shall apply:

30(i) No later than 30 days following a decree of the

1court of common pleas under section 433(e), the governing
2body shall provide written notice to the administrator
3that the governing body intends to adopt an ordinance
4containing recommended governing standards for the
5inclusion in the essential services plan.

6(ii) No later than 60 days following the notice
7provided under subparagraph (i), the governing body shall
8adopt an ordinance containing recommended governing
9standards for inclusion in the essential services plan.
10The ordinance may incorporate, by reference, any
11previously enacted ordinance of the municipality.

12(d) Powers of district advisory committee authorized.--After
13the review of the court of common pleas resulting in a decree
14under section 433(e) but prior to the date of disincorporation,
15in addition to the powers provided for under this subchapter,
16the governing body of the municipality may advise the
17administrator in the manner provided for the district advisory
18committee under Subchapter D in the formation and amendment of
19the essential services plan.

20Section 436. Essential services plan.

21(a) Formation.--The administrator shall, within 90 days
22following appointment and in consultation with the department,
23develop an essential services plan to provide essential services
24after the date of disincorporation. The essential services plan
25shall provide for:

26(1) Negotiation of contracts for the provision of vital
27and necessary services, not otherwise provided by an
28authority, as defined under Chapters 6 and 7. If the
29municipality participates in a regional police or fire
30department through an intergovernmental cooperation

1agreement, the essential services plan may provide for
2continued service from that regional department by contract
3or by renegotiating the intergovernmental cooperation
4agreement.

5(2) Local emergency management in accordance with the
6plan and program of the Pennsylvania Emergency Management
7Agency. The administrator shall consult with the emergency
8management organization of the county where the district is
9located to develop a plan which serves the district in a
10substantially similar manner as plans required for a
11political subdivision under 35 Pa.C.S. Ch. 75 Subch. A
12(relating to general provisions). The plan shall include a
13procedure for a declaration of a disaster emergency to be
14made in the district and the designation of a local
15coordinator of emergency management. The administrator is
16authorized to negotiate any contracts which are necessary to
17provide for the execution of a plan formed under this
18paragraph.

19(3) Payment of the lawful financial obligations of the
20unincorporated service district, including any transferred
21current obligation of the municipality and service of any
22debt incurred by the municipality in the manner provided by
23Subchapter D, after the disincorporation of the municipality.

24(4) Assessment of fees as provided by Subchapter D.

25(5) Disposition of all municipal property by sale, lease
26or conveyance for any of the following purposes:

27(i) Payment of outstanding debt obligations.

28(ii) Provision of services by an entity contracting
29with the unincorporated service district.

30(iii) Possession of title by the Commonwealth as

1provided by Subchapter D.

2(6) Termination of all contracts with the municipality.

3(7) Administration of the unincorporated service
4district, which may include reimbursement to the department
5for the compensation of the administrator.

6(8) Establishment of the date of disincorporation of the
7municipality as provided for by section 439.

8(9) Establishment of the name of the district. A
9district established by this act shall be named "The
10Unincorporated District of ........................."

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

12(1) Provide for the levy of any taxes.

13(2) Terminate an obligation to repay any debt, except
14that the plan may designate the unincorporated service
15district as the servicer of a debt and may specify that a
16debt secured by the collection of taxes shall be secured by
17the assessment of fees sufficient to satisfy the service
18obligations of the debt.

19(3) Assess and collect a higher amount of fees in the
20district's first full calendar year totaling 5% more than the
21total taxes levied in the municipality's final year before
22disincorporation.

23(4) Authorize the incurrence of any debt by the
24district, except as provided under section 441(k).

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

26(1) The essential services plan shall provide for
27governing standards, which standards shall include:

28(i) Rules and conduct related to the maintenance of
29property, conduct in public places and the parking of
30vehicles in public places which shall protect the health,

1safety and welfare of the residents and property owners
2of the district to the extent such rules and conduct
3could have been adopted by the municipality by ordinance.

4(ii) Fines and other relief which may be granted by
5a court presiding over a civil action brought for a
6violation of the governing standards.

7(2) If the governing body of the municipality adopts
8recommended governing standards as provided in section
9435(c), the administrator shall include the recommended
10governing standards in the essential services plan unless the
11administrator finds that the recommended governing standards
12are unlawful, unconstitutional or would substantially impede
13the administration of the essential services plan.

14Section 437. Proposed essential services plan.

15(a) Filing.--Within 90 days of the appointment of the
16administrator, the administrator shall deliver true and correct
17copies of the proposed essential services plan to:

18(1) The municipal clerk or municipal secretary, who
19shall immediately place the copy on file for public
20inspection in the municipal office.

21(2) The secretary.

22(3) Each member of the municipal governing body.

23(4) The chief executive officer of the municipality.

24(5) The chief financial officer of the municipality.

25(6) The solicitor of the municipal governing body.

26(b) Date of filing.--For purposes of this section, the date
27of filing the proposed essential services plan shall be the date
28on which the municipal clerk or municipal secretary places a
29true and correct copy of the proposed essential services plan on
30file for public inspection in the municipal office.

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

2(1) On the date of filing, notice that a proposed
3essential services plan has been filed and is open for public
4inspection in the municipal office shall be published by the
5administrator in the county legal reporter and in one or more
6newspapers with general circulation serving the area in which
7the municipality is located. The cost for publishing the
8notice shall be borne by the department. The notice shall
9contain the following:

10(i) A statement that a proposed essential services
11plan has been filed regarding the provision of essential
12services to the residents and property owners of the
13unincorporated service district which shall succeed the
14municipality after disincorporation.

15(ii) The date and place of filing.

16(iii) A statement that the public has 15 days from
17the date of filing in which to file written comments
18relating to the proposed essential services plan.

19(iv) The name and address of the administrator to
20whom written comments should be sent.

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

22(2) Notice of an administrator's public meeting on the
23proposed essential services plan shall be published by the
24administrator in the county legal reporter and in one or more
25newspapers with general circulation serving the area in which
26the municipality is located. The department shall bear the
27cost for publishing the notice. The notice shall contain the
28following:

29(i) A statement that the purpose of the
30administrator's public meeting is to receive public

1comments on the proposed essential services plan.

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

3(3) The administrator may combine the publication of the
4notice that a proposed essential services plan has been filed
5with the publication of the notice of the public meeting.

6(d) Comment period.--Written comments on the proposed
7essential services plan may be filed with the administrator.
8Written comments shall be made no later than 15 days after the
9date of filing. Written comments judged by the administrator to
10have value to the proposed essential services plan may be used
11to develop revisions for a final essential services plan.

12(e) Administrator's public meeting.--A meeting conducted by
13the administrator in the municipality shall be set for a date no
14later than 20 days after the date of filing the proposed
15essential services plan. The administrator shall request in
16writing that the chief executive officer, each member of the
17municipal governing body and the chief financial officer of the
18municipality to be present at the service administrator's
19meeting. At that meeting, the administrator shall:

20(1) Present a summary of the proposed essential services
21plan.

22(2) Receive public comment on the proposed essential
23services plan.

24(3) Allow the members of the governing body of the
25municipality to present written and oral comments requesting
26revisions of the proposed essential services plan.

27Section 438. Final essential services plan.

28(a) Amendment of plan.--

29(1) The administrator shall consider all timely
30submitted written comments, comments presented at the public

1meeting and requests for revision in the amendment of the
2publicly presented proposed essential services plan before
3publishing a final essential services plan.

4(2) In the event that the administrator does not
5incorporate the requests for revision by the members of the
6governing body of the municipality regarding the levels of
7services provided under the proposed essential services plan
8or the basis for the calculation of fees assessed under the
9proposed essential services plan, the administrator shall
10state in the proposed essential services plan why the
11requested revisions were not feasible to incorporate in the
12final essential services plan.

13(b) Notice of final essential services plan.--Within 45 days
14of the public meeting the administrator shall file the final
15essential services plan with the persons listed in section
16437(a) and provide notice of the publication of the final
17essential services plan in the manner provided in section
18437(c)(1)(i), (ii) and (v).

19(c) Appeal.--

20(1) Any person aggrieved by the final essential services
21plan may appeal the plan to the court of common pleas within
2230 days of notice of the filing of the final essential
23services plan. For purposes of this section, notice shall
24constitute the date that the person received actual notice of
25the final essential services plan, or the date that notice of
26the filing of the final essential services plan is first
27published in a newspaper with general circulation serving the
28area in which the municipality is located.

29(2) No appeal of a final essential services plan shall
30constitute an automatic stay of the essential services plan.

1(3) The appeal shall be sustained only where the court
2finds that the final essential services plan is unlawful or
3unconstitutional, or the conduct of the administrator is
4arbitrary or capricious.

5Section 439. Disincorporation of municipality.

6(a) Effects of disincorporation.--On the date of
7disincorporation, the following shall occur:

8(1) Notwithstanding any other provision of law, the
9terms of office of all elected officials of the municipality
10shall end and no person shall be elected or appointed to fill
11any vacancy of office.

12(2) All ordinances of the municipality shall be
13nullified.

14(3) All corporate powers granted to the municipality
15under its charter, municipal code or any other provision of
16law shall terminate.

17(4) The municipality shall be deemed by operation of law
18to be disincorporated. The area formerly contained within the
19municipality shall be an unincorporated service district as
20provided under Subchapter D.

21(b) Duties of administrator.--On or before the date of
22disincorporation, the administrator shall:

23(1) Execute all contracts for the provision of services
24and otherwise implement the essential services plan, which
25shall take effect on the date of disincorporation.

26(2) Provide notice of assessments to the property owners
27of the unincorporated service district according to the
28procedure provided in section 443(b) which may be a partial
29year assessment as provided by section 443(e).

30(3) Provide notice to the Governor and all Commonwealth

1agencies that the municipality has been disincorporated and
2the date of disincorporation.

3(c) Duties of county.--Effective on the date of
4disincorporation, notwithstanding any other provision of law,
5the county in which the municipality is located shall:

6(1) Adopt a zoning ordinance which applies to the
7unincorporated service district and adopts the substantive
8provisions of the municipality's zoning ordinance, if any, as
9it was in effect before nullification by subsection (a)(2).

10(2) Adopt an official map for the unincorporated service
11district which adopts the substance of the municipality's
12official map, if any, as it was in effect before
13nullification by subsection (a)(2).

14(3) Unless the county has adopted a subdivision and land
15development ordinance prior to the date of disincorporation
16of the municipality, adopt a subdivision and land development
17ordinance which shall apply to any unincorporated service
18district within the county.

19(4) Provide for the administration of the zoning
20ordinance and the subdivision and land development ordinance
21as they apply to the unincorporated service district and any
22other provisions of the act of July 31, 1968 (P.L.805,
23No.247), known as the Pennsylvania Municipalities Planning
24Code, that may be applicable.

25(5) Amend the county's comprehensive plan to the extent
26necessary to be consistent with the requirements of this
27subsection.

28(d) Property succession.--Immediately following
29disincorporation the area formerly contained within the
30municipality shall, by operation of law, be deemed an

1unincorporated service district under Subchapter D, the
2Commonwealth shall succeed in title to all property, including
3all real property, personal property and moneys in any municipal
4account, of the disincorporated municipality to be held in trust
5for the benefit of the residents and property owners of the
6unincorporated service district as provided under Subchapter D.

7SUBCHAPTER D

8UNINCORPORATED SERVICE DISTRICT

9Section 441. Establishment of unincorporated service district.

10(a) General rule.--The area formerly contained within a
11municipality shall, after disincorporation under Subchapter C,
12become an unincorporated service district. The district shall be
13an entity of the Commonwealth established for the special
14purpose of providing essential services to the citizens living
15within the district until such time as the district is
16incorporated as a municipality or made a part of a merged or
17consolidated with an existing municipality under section 447.

18(b) Authorized administrative authority.--All powers
19providing for the administration of the district shall be vested
20in the department through the administrator as provided in this
21subchapter. The district advisory committee shall not possess
22the corporate powers of the governing body of any municipality
23or any authority, except as provided by this subchapter.

24(c) Corporate powers prohibited.--Nothing in this subchapter
25shall be construed as authorizing the district to exercise
26corporate powers for the administration of a local government,
27including the power to levy taxes, establish elected or
28appointed offices and purchase, sell or convey property, except
29that the residents of the district may incorporate a
30municipality or merge or consolidate with an existing

1municipality as provided for in section 447.

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

3(1) All assets not sold by the municipality during the
4process of its disincorporation shall be conveyed to the
5Commonwealth to be held in trust for the benefit of the
6residents and property owners of the district.

7(2) The administrator shall serve as trustee of the
8property and provide for the repair and maintenance of all
9real property and roadways held in trust for the benefit of
10the residents and property owners of the district through the
11collection of assessments under this subchapter and
12administration of payments distributed to the district as
13provided in subsection (f).

14(3) Nothing in this subsection shall be construed as
15providing the express approval of the General Assembly to
16dispose of or use any lands acquired with funds under the act
17of June 22, 1964 (Sp.Sess., P.L.131, No.8), known as the
18Project 70 Land Acquisition and Borrowing Act, for purposes
19other than those provided by that act, except that the
20Commonwealth may succeed in title of the property for the
21limited purposes established by this subsection.

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

23(1) All debt incurred by the municipality before the
24establishment of the district shall be held by the district
25for administration by the administrator. Any such debt shall
26be secured by the assets conveyed to the Commonwealth and
27held in trust under subsection (d) and serviced by fees
28collected under this subchapter.

29(2) Nothing in this section shall be construed to
30authorize the Commonwealth to guarantee any debt incurred by

1a municipality or district with the full faith and credit of
2the Commonwealth, revenues from the General Fund or any other
3source of revenue not derived from fees assessed for the
4administration of this subchapter or gains from the sale of
5assets of the former municipality.

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

7(1) A district shall be eligible to receive any
8financial grant, loan or payment and participate in any
9program for which it was eligible when it was a municipality,
10including, but not limited to, emergency grants and loans
11under Chapter 3, payments distributed pursuant to the act of
12June 1, 1956 (1955 P.L.1944, No.655), referred to as the
13Liquid Fuels Tax Municipal Allocation Law, all programs
14administered by the Pennsylvania Infrastructure Investment
15Authority and all economic and community development programs
16funded by the Commonwealth.

17(2) A district shall continue to receive priority in all
18economic and community development programs funded by the
19Commonwealth as provided for by Subchapter E of Chapter 2.

20(3) The administrator may apply for and shall manage any
21funds distributed to the district pursuant to this section.

22(g) Credit for fees assessed.--The payment of fees under
23this subchapter by a resident of a district shall constitute a
24credit against the collection of any income tax by a
25municipality on nonresidents, if applicable.

26(h) Relationship with existing municipal and other
27authorities preserved.--

28(1) All authorities established to provide services to
29the residents and property owners of a municipality prior to
30disincorporation shall continue to serve the residents and

1property owners of a district, and all members of the
2authority appointed by the governing body of the municipality
3prior to disincorporation shall continue to serve out the
4remainder of the members' terms.

5(2) Notwithstanding the provisions of 53 Pa.C.S. § 5607
6(relating to purposes and powers) or any other provision of
7law, subsequent appointments to the authority board which
8would otherwise be made by the governing body of the
9municipality shall be made by the administrator in
10consultation with the district advisory committee.

11(i) Governing standards enforceable.--

12(1) The governing standards included in the essential
13services plan shall be enforceable by the filing of a civil
14action by the administrator or any aggrieved property owner
15or resident of the district.

16(2) A violation of the governing standards shall
17constitute a public nuisance.

18(3) A magisterial district court or another court of
19competent jurisdiction presiding over a civil action brought
20under this subsection may find relief for the filing party
21according to the relief provided for in the essential
22services plan or any other relief which is available by law
23for the abatement of a public nuisance.

24(j) Pennsylvania Construction Code applicable.--

25(1) The act of November 10, 1999 (P.L.491, No.45), known
26as the Pennsylvania Construction Code Act, shall apply to all
27construction, alteration, repair and occupancy of all
28buildings within the district as though the district were a
29municipality which opted not to adopt the uniform
30construction code by ordinance.

1(2) The administrator shall receive any application for
2a construction permit and provide appropriate notices to an
3applicant of a construction permit and the Department of
4Labor and Industry as provided under section 501(e) of the
5Pennsylvania Construction Code Act.

6(k) Incurrence of debt limited.--The district shall not
7incur debts not provided for in subsection (e), except that the
8administrator may utilize such mechanisms as are necessary to
9incur temporary debts, or make purchases on credit, on behalf of
10and for the limited purpose of managing the cash flow for the
11district. All obligations incurred under this subsection shall
12be satisfied in full within one year and secured only by the
13anticipation of the collection of assessments under section 443.

14Section 442. Service district advisory committee.

15(a) Establishment.--Each service district shall establish a
16service district advisory committee.

17(b) Composition.--The district advisory committee shall be
18composed of three persons who are at least 18 years of age,
19including two resident property owners of the district and one
20owner of a business within the district, if any, who may or may
21not be a resident of the district.

22(c) Appointment by governing body.--At least 30 days prior
23to the date of disincorporation, the governing body of the
24former municipality shall appoint three members of the district
25advisory committee. The governing body shall designate that one
26appointee serve a term of one year, one appointee serve a term
27of two years and one appointee serve a term of three years.

28(d) Vacancy.--At the expiration of the term of a member of
29the district advisory committee, the remaining members of the
30committee shall appoint a person to fill the vacancy. In the

1event that the remaining members of the committee are unable to
2agree on a person to fill the vacancy or there is more than one
3vacancy, the administrator shall select a person or persons to
4fill the vacancy. All persons appointed to fill a vacancy on the
5district advisory committee shall have a term of three years
6beginning on the date of appointment.

7(e) Advise administrator.--The district advisory committee
8shall, at least once every three months, meet with the
9administrator and may make recommendations to the administrator
10for revisions to the essential services plan, including
11revisions to the levels of services provided to the residents
12and property owners of the district and methodology of rate
13calculation. The administrator shall consider all
14recommendations of the district advisory committee.

15(f) Advise county on land use issues.--The district advisory
16committee may provide recommendations on behalf of the residents
17and property owners of the district to any county official
18regarding any land use-related matter.

19(g) Advise department on incorporation.--The district
20advisory committee may provide recommendations to the department
21at any time that the residents of the district and the
22department consider the feasibility of incorporating as a viable
23municipality or merger or consolidation with an existing
24municipality.

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

26(1) Amendments to the governing standards may be
27recommended by a majority vote of the district advisory
28committee or by a petition signed by registered electors of
29the municipality comprising at least 10% of the number of
30electors voting for the office of Governor in the last

1gubernatorial general election.

2(2) Upon receipt of a recommendation made under this
3subsection, the administrator shall include the recommended
4amendments to the governing standard as a proposed plan
5amendment under section 444, unless the administrator finds
6that the recommended amendment of the governing standards is
7unlawful, unconstitutional or would substantially impede the
8administration of the essential services plan.

9(i) Restrictions.--The district advisory committee shall
10have no authority to act as a municipal governing body.

11(j) Open meetings.--The district advisory committee shall be
12an agency for purposes of the open meeting provisions of 65
13Pa.C.S. Ch.7 (relating to open meetings).

14Section 443. Assessments.

15(a) Authority to assess.--The administrator may establish
16assessments on a front foot or benefit-conferred basis, or a
17combination of both, on all real property within the district to
18provide for:

19(1) The cost of all essential services provided to the
20district.

21(2) The service of all debts held in trust by the
22Commonwealth which were incurred by the former municipality
23prior to disincorporation.

24(3) The necessary construction, maintenance or repair of
25facilities or properties which have been conveyed to the
26Commonwealth and are held in trust for the benefit of the
27district.

28(4) Reimbursement to the department of its reasonable
29costs of administration of the district, including, but not
30limited to, the compensation of the administrator and the

1collection of assessments authorized under this section.

2(5) Other costs incurred by the district or
3administrator in the execution of this subchapter, including
4a reserve of no more than 15% of the annual estimated costs
5of the essential services plan in the restricted account
6established in section 445 to provide for the provision of
7unforeseeable costs.

8(b) Establishment of assessment.--

9(1) No later than October 1 of the year preceding the
10year for which the assessment applies, the administrator
11shall establish a schedule of assessment for all real
12property within the unincorporated district.

13(2) The administrator shall provide written personal
14notice to each property owner of each property of the
15assessment due for the ensuing year no later than November 1
16of the year preceding the year for which the assessment
17applies.

18(3) As used in this subsection, "personal notice" shall
19mean and include notice upon the owner of a property either
20by personal service upon the owner or by certified mail to
21the owner at the owner's last known address or where service,
22after a reasonable attempt, shall not have been successfully
23made by either of these two methods, then by leaving notice
24at or upon the property.

25(c) Appeal of assessment.--Any person wishing to challenge
26the reasonableness of the assessment may file a suit in the
27court of common pleas within 30 days of receiving the notice
28provided in subsection (b).

29(d) Payment of assessments.--Payment of the assessment in
30full shall be due no later than March 1, unless the

1administrator has provided for installment payments in
2accordance with subsection (e).

3(e) Installments.--The administrator may provide for the
4payment of assessments by equal installments on a quarterly or
5semiannual basis as follows:

6(1) The administrator shall provide written personal
7notice of the installment plan to owners containing the date
8installments are due, interest and prepayment.

9(2) The rate of interest for the installments shall be
10established by the administrator at a rate of 6% per year.

11(3) If any of the installments remain unpaid for 60 days
12after the same has become due and payable, the entire unpaid
13assessment, plus unpaid accrued interest and any costs, shall
14be due and payable and the administrator shall proceed to
15collect the assessment due as provided in subsection (g).

16(4) A property owner upon whom an assessment has been
17made may pay all or as many of the installments before the
18same are due, with interest and costs to the due date of the
19next installment.

20(f) First year assessment.--The administrator may provide
21for a partial assessment for the calendar year in which the
22disincorporation of the municipality occurs. The due date for a
23partial year assessment and installment schedule may be set by
24the administrator, provided that no assessment shall be due
25sooner than 60 days after the administrator provides written
26personal notice of the assessment under the procedure in
27subsection (a).

28(g) Delinquent assessments.--Assessments remaining unpaid on
29December 31 of the year in which they are due shall be
30delinquent and subject to interest at a rate of 10% per year

1from the date of filing as a lien in accordance with the act of
2May 16, 1923 (P.L.207, No.153), referred to as the Municipal
3Claim and Tax Lien Law.

4(h) Liens.--An assessment, together with all charges,
5expenses and fees, including reasonable attorney fees necessary
6for its collection, shall be a lien upon the real property
7benefited. The lien shall have the same priority and may be
8collected in the same manner as a municipal lien in accordance
9with the Municipal Claim and Tax Lien Law or through a civil
10action initiated by the administrator.

11(i) Limited assessment of public property.--An assessment
12under this section on property held by the Federal Government,
13the Commonwealth and any other public property shall be limited
14to an assessment for those services which are directly consumed
15by the property, including, but not limited to, water service,
16sewer service and waste collection.

17Section 444. Amendment of essential services plan.

18(a) Periodic review.--No less than once per year, the
19administrator shall meet with the district advisory committee to
20consider the adequacy of the essential services plan and
21consider any request for revision of the essential services plan
22made by the district advisory committee.

23(b) Filing of amendment.--The administrator may file a
24proposed essential services plan amendment with the secretary
25and each member of the district advisory committee at any time.
26The district advisory committee may request a public meeting to
27consider the amendment within five days of the filing of a
28proposed essential services plan amendment.

29(c) Notice of amendment.--No later than the date that the
30administrator files the proposed essential services plan

1amendment, the administrator shall provide notice to the public
2of the amended essential services plan using the procedure
3provided for by section 437(c)(1). If the district advisory
4committee requests a public hearing, the administrator shall
5schedule a public meeting within 30 days of the date that the
6proposed essential services plan amendment was filed and provide
7notice of the public meeting using the procedure provided for by
8section 437(c)(2).

9(d) Comment period.--Written comments on the proposed
10essential services plan amendment may be filed with the
11administrator. Written comments must be made no later than 15
12days after the date of filing. Written comments judged by the
13administrator to have value to the essential services plan may
14be used to develop revisions for a final essential services plan
15amendment.

16(e) Administrator's public meeting.--If a public meeting is
17scheduled at the request of the district advisory committee, the
18administrator shall request in writing that the members of the
19district advisory committee be present at the administrator's
20meeting. At that meeting, the administrator shall:

21(1) Present a summary of the proposed essential services
22plan amendment.

23(2) Receive public comment on the proposed essential
24services plan amendment.

25(3) Allow the members of the district advisory committee
26to present written and oral comments requesting revisions of
27the proposed essential services plan amendment.

28(f) Final essential services plan amendment.--The
29administrator shall consider all timely submitted written
30comments, comments presented at the public meeting and requests

1for revision in the amendment of the publicly presented proposed
2essential services plan before filing a final essential services
3plan amendment. In the event that the administrator does not
4incorporate the requests for revision by the district advisory
5committee regarding the levels of services provided under the
6essential services plan or the basis for the calculation of fees
7assessed under the essential services plan, the administrator
8shall state in the essential services plan amendment why the
9requested revisions were not feasible to incorporate in the
10final essential services plan.

11(g) Emergency essential services plan amendment.--
12Notwithstanding the requirements provided by this section for
13the adoption of a final essential services plan amendment, where
14the secretary finds that there is or will be an imminent threat
15to public safety, human health or the environment, the secretary
16may provide a waiver to the administrator allowing the
17administrator to immediately publish an emergency essential
18services plan amendment. An emergency essential services plan
19amendment shall take effect immediately.

20(h) Notice of final essential services plan amendment.--The
21administrator shall provide notice of the publication of the
22final essential services plan amendment or emergency essential
23services plan amendment in the manner provided in section 437(c)
24(1)(i), (ii) and (v). Upon providing notice as required by this
25chapter, the administrator may execute any contract necessary to
26administer the essential services plan, as amended.

27(i) Appeal.--

28(1) Any person aggrieved by a final essential services
29plan amendment or emergency essential services plan amendment
30may appeal the final essential services plan amendment to the

1court of common pleas within 30 days of notice of the filing
2of the final essential services plan amendment.

3(2) For purposes of this section, notice shall
4constitute the date that the person received actual notice of
5the final essential services plan amendment, or the date that
6notice of the filing of the final essential services plan
7amendment is first published in a newspaper with general
8circulation serving the area in which the municipality is
9located.

10(3) An appeal of a final essential services plan
11amendment shall be limited to the amended portion of the
12essential services plan.

13(4) No appeal of a final essential services plan
14amendment shall constitute an automatic stay of any portion
15of the essential services plan.

16(5) The appeal shall be sustained only where the court
17finds that the final essential services plan amendment is
18unlawful or unconstitutional, or the conduct of the
19administrator is arbitrary or capricious.

20Section 445. Unincorporated Service District Trust Fund.

21(a) Establishment.--There is hereby established a special
22fund in the State Treasury, separate and apart from all other
23public moneys or funds of the Commonwealth, to be known as the
24Unincorporated Service District Trust Fund. The purpose of this
25fund shall be to hold moneys from unincorporated service
26districts and pay for the expenses and obligations of
27administrators, unincorporated service districts and the
28department pursuant to Subchapter C. The department shall
29allocate funds specific to a district in a restricted account
30pursuant to section 445.1.

1(b) Appropriation.--As much as may be necessary of such
2moneys and interest in the special fund established under
3subsection (a) is hereby appropriated for the purposes
4authorized by this subchapter.

5Section 445.1. Restricted accounts.

6(a) Establishment.--There is established in the
7Unincorporated Service District Trust Fund a restricted account
8for each unincorporated service district. The administrator for
9each district shall deposit all moneys collected by assessments,
10delinquent municipal tax receipts, and proceeds from the sale of
11municipal assets authorized under this subchapter into the
12restricted account not later than 30 days after collection. Any
13interest accrued on the account shall be credited to the account
14for purposes of meeting the requirements of this subchapter. The
15restricted account shall be used to pay for the expenses and
16obligations of the administrator and the unincorporated service
17district. The department may pay for the compensation and
18expenses of the administrator from the restricted account.

19(b) Appropriation.--As much as may be necessary of such
20moneys and interest in the restricted account established under
21subsection (a) is hereby appropriated for the purposes
22authorized by this subchapter.

23Section 446. Audit.

24The Auditor General shall conduct an annual audit of the
25district. The audit shall include a review of the services
26rendered under the essential services plan, the proceeds
27generated by the assessments levied pursuant to section 443 and
28all transactions made by the administrator on behalf of the
29district.

30Section 447. Merger and consolidation; incorporation of

1municipal corporation.

2(a) Merger and consolidation.--

3(1) For the limited purpose of merging or consolidating
4with one or more surrounding municipalities under 53 Pa.C.S.
5Ch. 7 Subch. C (relating to consolidation and merger), the
6residents of the district may file a petition with the county
7board of elections as provided in 53 Pa.C.S. §§ 735 (relating
8to initiative of electors seeking consolidation or merger
9without new home rule charter) and 735.1 (relating to
10initiative of electors seeking consolidation or merger with
11new home rule charter).

12(2) Residents of the district may be nominated to, and
13serve on, a commission formed to study merger or
14consolidation of the district with one or more
15municipalities.

16(3) Upon favorable action by the electorate on
17consolidation or merger, the administrator, in consultation
18with the district advisory committee, may enter into a merger
19or consolidation agreement with the governing bodies of other
20municipalities in accordance with 53 Pa.C.S. § 737 (relating
21to consolidation or merger agreement) and shall provide for
22the transition of the district into a consolidated or merged
23municipality with the same powers and duties as provided by
24law to governing bodies of municipalities.

25(4) The administrator may expend district funds to the
26extent authorized by law for the purpose of merger,
27consolidation or incorporation as provided in subsection (b).

28(b) Incorporation as municipality.--If the secretary
29determines that the district could be incorporated as a viable
30municipality, the residents of the district may establish or

1incorporate the territory of the district as a municipality as
2provided by law.

3(c) Grants permitted.--The department may issue any loan or
4grant authorized under Chapter 3 to a merged, consolidated or
5subsequently incorporated municipality, including the territory
6of the district to provide transitional assistance.

7(d) Assets in trust.--All assets conveyed to the
8Commonwealth to be held in trust, not otherwise transferred
9under the essential services plan or sold to repay the debt of
10the former municipality, shall be conveyed to a merged,
11consolidated or subsequently incorporated municipality,
12including the territory of the district.

13(e) Assumption of debt.--All debt obligations held in trust
14by the Commonwealth on behalf of the former municipality for
15service by a district shall be assumed by a merged, consolidated
16or subsequently incorporated municipality, including the
17territory of the district.

18Section 25. Chapter 5 of the act is repealed:

19[CHAPTER 5

20FUNDING

21Section 501. Appropriation.

22The sum of $5,000,000, appropriated under section 210 of the
23act of July 1, 1986 (P.L.1776, No.5A), known as the General
24Appropriation Act of 1986, shall be used to carry out the
25provisions of this act. The appropriation shall be distributed
26as follows:

27(1) $500,000 shall be used by the department for
28administrative expenses necessary to carry out the provisions
29of this act.

30(2) $4,500,000 shall be used to provide grants and loans

1to municipalities determined to be financially distressed
2pursuant to this act.]

3Section 26. Chapter 6 heading of the act, added October 20,
42011 (P.L.318, No.79), is amended to read:

5CHAPTER 6

6FISCAL EMERGENCIES IN [CITIES OF THE

7THIRD CLASS] MUNICIPALITIES

8Section 27. Sections 601, 602 and 603 of the act, renumbered
9and added October 20, 2011 (P.L.318, No.79), are amended to
10read:

11Section 601. Definitions.

12The following words and phrases when used in this chapter
13shall have the meanings given to them in this section unless the
14context clearly indicates otherwise:

15"Authority." A municipal authority, parking authority or any
16other authority or corporate entity that is directly or
17indirectly controlled by a distressed [city] municipality or to
18which a distressed [city] municipality has power of appointment.
19The term shall not include a joint municipal authority.

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

21"Debt obligations." Any obligation to pay money, including
22amounts owed for payments relating to lease rental debt, debt
23service, bonds, notes, guarantees for bonds or notes, trust
24indentures, contracts or other agreements.

25"Distressed [city] municipality." A [city] municipality
26which has been determined to be financially distressed under
27section 203(f).

28"Fiscal emergency." A determination made by the Governor
29under section 602(b).

30"Insolvent." Unable to meet all financial obligations as

1they become due, including payment of debt obligations.

2"Municipality." A municipality as defined in section 103,
3other than a city of the first class.

4"Vital and necessary services." Basic and fundamental
5municipal services, including any of the following:

6(1) Police and fire services.

7(2) Ambulance and rescue services.

8(3) Water supply and distribution.

9(4) Wastewater services.

10(5) Refuse collection and disposal.

11(6) Snow removal.

12(7) Payroll and pension obligations.

13(8) Fulfillment of payment of debt obligations or any
14other financial obligations.

15Section 602. Declaration of fiscal emergency.

16(a) Fiscal emergency.--The Governor determines a fiscal
17emergency exists if the distressed [city] municipality:

18(1) (i) is insolvent or is projected to be insolvent
19within 180 days or less; [or] and

20(ii) is unable to ensure the continued provision of
21vital and necessary services; [and] or

22(2) [(i)] has failed to adopt or implement:

23(i) the coordinator's plan in accordance with 
24Subchapter C or C.1 of Chapter 2; or

25(ii) [has failed to adopt or implement] an
26alternative plan that the secretary has approved under
27section 246.

28(b) Governor.--Upon making a determination that a state of
29fiscal emergency exists, the Governor may declare a state of
30fiscal emergency within the distressed [city] municipality.

1Immediately upon making the declaration, the Governor shall:

2(1) Provide written notice of the declaration to the 
3governing body and, if applicable, the chief executive 
4officer of the distressed [city] municipality along with a 
5concise statement of facts supporting the determination.

6(2) Direct the secretary to, within ten days of the
7Governor's declaration, develop an emergency action plan to
8ensure that vital and necessary services are maintained
9within the [city] municipality during the state of fiscal
10emergency.

11(c) Secretary.--In developing the emergency action plan, the
12secretary shall consider the financial plan prepared by the
13coordinator under Subchapter C of Chapter 2 and any other
14available plan or information the secretary deems appropriate
15and may employ financial or legal experts to assist in
16addressing the fiscal emergency. Notwithstanding any law to the
17contrary, the employment of such experts shall not be subject to
18contractual competitive bidding procedures.

19Section 603. Notification by the secretary.

20(a) Notice.--Upon completion of the emergency action plan,
21the secretary shall cause the plan to be posted on the
22department's publicly accessible Internet website and shall
23provide written notice of the emergency action plan by overnight
24delivery service, providing proof of receipt, to all members of
25the governing body and, if applicable, the chief executive
26officer of the distressed [city] municipality.

27(b) Publication.--The secretary shall publish once in a
28newspaper of general circulation notice that the emergency
29action plan has been completed. The notice shall specify the
30publicly accessible Internet address of the department's website

1where the plan is posted.

2Section 28. Sections 604, 605, 606, 607, 608, 609 and 610 of
3the act, added October 20, 2011 (P.L.318, No.79), are amended to
4read:

5Section 604. Powers of the Governor.

6(a) Powers.--During the state of fiscal emergency, the
7Governor may exercise the authority of the elected or appointed
8officials of the distressed [city] municipality or authority as
9necessary to ensure the provision of vital and necessary
10services and may delegate the authority to the secretary or a
11designee of the secretary. The emergency powers of the Governor
12shall include the following:

13(1) The power to collect funds payable to the distressed
14[city] municipality and authority and use those funds to pay
15for vital and necessary services.

16(2) The power to obtain emergency financial aid for the
17distressed [city] municipality and authority under Chapter 3
18to pay for vital and necessary services.

19(3) The power to enter into contracts and agreements on
20behalf of the distressed [city] municipality and authority to
21pay for vital and necessary services.

22(4) The power to modify the emergency action plan as
23necessary to ensure the provision of vital and necessary
24services.

25(5) Any other power of the elected or appointed
26officials of the distressed [city] municipality or authority
27to ensure the provision of vital and necessary services.

28(b) Orders.--The Governor may issue an order to an elected
29or appointed official of the distressed [city] municipality or
30an authority to implement any provision of the emergency action

1plan or refrain from taking any action that would interfere with
2the powers granted to the Governor or the goals of the plan. An
3order issued under this subsection shall be enforceable under
4section 606.

5(c) Authorization prohibited.--Neither this chapter nor the
6emergency action plan shall be interpreted to authorize the
7Governor to:

8(1) Unilaterally levy taxes.

9(2) Unilaterally abrogate, alter or otherwise interfere
10with a lien, charge, covenant or relative priority that is:

11(i) held by a holder of a debt obligation of a
12distressed [city] municipality; and

13(ii) granted by the contract, law, rule or
14regulation governing the debt obligation.

15(3) Unilaterally impair or modify existing bonds, notes,
16municipal securities or other lawful contractual or legal
17obligations of the distressed [city] municipality or
18authority[, except as otherwise ordered by a court of
19competent jurisdiction].

20(4) Authorize the use of the proceeds of the sale,
21lease, conveyance, assignment or other use or disposition of
22the assets of the distressed [city] municipality or
23authorities in a manner contrary to section 707.

24(5) Pledge the full faith and credit of the
25Commonwealth.

26Section 605. Elected and appointed officials.

27During a fiscal emergency, the authorities and appointed and
28elected officials of the distressed [city] municipality shall
29continue to carry out the duties of their respective offices,
30except that no decision or action shall conflict with an

1emergency action plan, order or exercise of power by the
2Governor under section 604.

3Section 606. Mandamus.

4The Governor may petition Commonwealth Court to issue a writ
5of mandamus upon any elected or appointed official of the
6distressed [city] municipality or authority to secure compliance
7with an order issued under section 604(b). The court shall grant
8the relief requested within 14 days of the filing of the
9petition if it determines that the order was issued in
10compliance with this chapter.

11Section 607. Consent agreement.

12(a) Negotiations.--Within eight days of the declaration of a
13fiscal emergency, the governing body and, if applicable, the
14chief executive officer of the distressed [city] municipality
15shall convene a special public meeting to negotiate a consent
16agreement. The meeting shall be attended by the secretary or
17secretary's designee. Negotiations among creditors and any of
18the parties in this subsection shall be conducted in accordance
19with section 223(b).

20(b) Contents.--

21(1) The consent agreement shall incorporate a plan
22setting forth measures designed to provide long-term
23financial stability to the distressed [city] municipality
24after the termination of the fiscal emergency.

25(2) The consent agreement shall include all of the
26following:

27(i) Continued provision of vital and necessary
28services.

29(ii) Payment of the lawful financial obligations of 
30the distressed [city] municipality and authority. This
 

1subparagraph includes debt obligations, municipal 
2securities, lease rental obligations, legal obligations 
3and consensual modifications of existing obligations, 
4except as otherwise ordered by a court of competent 
5jurisdiction.

6(iii) Timely deposit of required payments to the
7pension fund for the distressed [city] municipality and
8each authority or the fund in which the distressed [city]
9municipality and each authority participates.

10(iv) Legislative and administrative actions to be
11taken by the elected or appointed officials of the
12distressed [city] municipality during the term of the
13consent agreement.

14(3) The consent agreement may include:

15(i) The sale, lease, conveyance, assignment or other
16use or disposition of the assets of the distressed [city]
17municipality or authority.

18(ii) Approval, modification, rejection,
19renegotiation or termination of contracts or agreements
20of the distressed [city] municipality or authorities.

21(iii) Execution of new contracts or agreements.

22(4) The consent agreement may not include any of the
23following:

24(i) Projections of revenue from a tax or tax rate
25not currently authorized by law.

26(ii) Provisions that unilaterally abrogate, alter or
27otherwise interfere with a lien, charge, covenant or
28relative priority, that is:

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

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

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

8(iv) Provisions that authorize the use of the
9proceeds of the sale, lease, conveyance, assignment or
10other use or disposition of the assets of the distressed
11[city] municipality or authorities in a manner contrary
12to section 707.

13(v) Any increase in the rate of an earned income tax
14imposed on nonresident workers.

15(c) Ordinance.--Notwithstanding any law to the contrary, the
16following shall apply:

17(1) Upon approval by a majority vote of the governing
18body of the distressed [city] municipality, the consent
19agreement shall be presented to the secretary within 20 days
20of the declaration of fiscal emergency.

21(2) The secretary shall approve or disapprove the
22consent agreement within three days.

23(3) If the secretary determines that the consent
24agreement is sufficient to overcome the distressed [city's]
25municipality's financial distress and approves the agreement,
26the governing body shall enact the consent agreement in the
27form of an ordinance within seven days of approval by the
28secretary.

29(4) The ordinance shall provide that, in the event of a
30breach or unilateral modification of the consent decree by

1the governing body or an elected or appointed official, the
2Governor may institute or reinstitute proceedings under
3Chapter 7.

4(d) Consent to proceedings under Chapter 7.--In addition to
5breach or modification of the consent agreement under subsection
6(c), the following shall be deemed consent to proceedings under
7Chapter 7:

8(1) Failure of the governing body of the distressed
9[city] municipality to convene or the failure of a quorum of
10the governing body to participate in a special public meeting
11required by subsection (a).

12(2) Failure of the governing body or, if applicable, the
13chief executive officer to enact a valid ordinance under
14subsection (c).

15(3) Failure of the distressed [city] municipality to
16comply with the consent agreement or provision of an
17ordinance enacted under subsection (c).

18(4) Enactment by the distressed [city] municipality of
19an amendment to the ordinance enacted in subsection (c) in
20violation of subsection (e).

21(e) Amendment.--The ordinance may be amended upon the
22approval of the secretary.

23(f) Collective bargaining.--A collective bargaining
24agreement or arbitration settlement executed following the
25enactment of an ordinance under this section may not in any
26manner violate, expand or diminish the provisions of the consent
27agreement, provided, however, that the provisions of section 252 
28shall apply to any consent agreement adopted in accordance with 
29this subchapter.

30Section 608. Termination of fiscal emergency and suspension of

1powers.

2(a) [Financial] Fiscal emergency.--A fiscal emergency shall
3end upon certification by the secretary that the [city is no
4longer financially distressed.] municipality:

5(1) is solvent and is not projected to be insolvent
6within 180 days or less; and

7(2) is able to ensure the continued provision of vital
8and necessary services after the termination of the fiscal
9emergency.

10(b) Governor's powers.--The emergency powers of the Governor
11under this chapter shall be suspended upon the enactment and
12continued implementation of an ordinance under section 607 or
13entry of a judicial order appointing a receiver under section
14702.

15Section 609. Restrictions.

16(a) Earned income tax on nonresidents.--A distressed [city]
17municipality subject to this chapter or Chapter 7 may not
18petition a court of common pleas for an increase in the rate of
19an earned income tax imposed on nonresident workers under
20section 123(c) [until the secretary terminates the distress
21status of the city under section 253].

22(b) Municipal debt adjustment.--A distressed [city]
23municipality subject to this chapter or Chapter 7 may not file a
24municipal debt adjustment action under the Bankruptcy Code (11
25U.S.C. § 101 et seq.) except to the extent authorized under
26Chapter 7.

27Section 610. Applicability.

28(a) Statement.--

29(1) This chapter shall apply only to distressed [cities]
30municipalities.

1(2) Except as set forth in subsection (b), nothing in
2this chapter is intended to limit or otherwise abrogate the
3applicability of any other part of this act.

4(b) Conflict.--If there is a conflict between a provision of
5this chapter and any other provision of this act, the provision
6of this chapter shall prevail.

7Section 29. Chapter 7 heading of the act, added October 20,
82011 (P.L.318, No.79), is amended to read:

9CHAPTER 7

10RECEIVERSHIP IN [CITIES OF THE

11THIRD CLASS] MUNICIPALITIES

12Section 30. Sections 701, 702, 703, 704, 705(g), 706, 707,
13708 and 709 of the act, added October 20, 2011 (P.L.318, No.79),
14are amended to read:

15Section 701. Definitions.

16The following words and phrases when used in this chapter
17shall have the meanings given to them in this section unless the
18context clearly indicates otherwise:

19"Authority." A municipal authority, parking authority or any
20other authority or corporate entity that is directly or
21indirectly controlled by a distressed [city] municipality or to
22which a distressed [city] municipality has power of appointment.
23The term shall not include a joint municipal authority.

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

25"Debt obligations." Any obligation to pay money, including
26amounts owed for payments relating to lease rental debt, debt
27service, bonds, notes, guarantees for bonds or notes, trust
28indentures, contracts or other agreements.

29"Distressed [city] municipality." A [city] municipality
30which has been determined to be financially distressed under

1section 203(f).

2"Fiscal emergency." A determination made by the Governor
3under section 602(b).

4"Insolvent." Unable to meet all financial obligations as
5they become due, including payment of debt obligations.

6"Vital and necessary services." Basic and fundamental
7municipal services, including any of the following:

8(1) Police and fire services.

9(2) Ambulance and rescue services.

10(3) Water supply and distribution.

11(4) Wastewater services.

12(5) Refuse collection and disposal.

13(6) Snow removal.

14(7) Payroll and pension obligations.

15(8) Fulfillment of payment of debt obligations or any
16other financial obligations.

17Section 702. Receivership.

18(a) Receiver.--Following the issuance of a declaration of
19fiscal emergency under section 602(b), the Governor may direct
20the secretary to file a petition in Commonwealth Court to
21appoint the individual named in the petition as a receiver for
22the distressed [city] municipality. The court shall have no
23authority to appoint anyone other than the individual named in
24the petition as the receiver.

25(b) Service and notice.--

26(1) The secretary shall serve the petition upon:

27(i) the governing body of the distressed [city]
28municipality;

29(ii) the chief executive officer of the distressed
30[city] municipality; and

1(iii) the governing body of each authority.

2(2) The secretary must publish notice of the filing of
3the petition once in a newspaper of general circulation.

4(c) Hearing.--Upon notification of the Governor of the
5failure of the distressed [city] municipality to adopt a valid
6ordinance under section 607, Commonwealth Court shall conduct a
7hearing within 15 days on the petition.

8(d) Determination.--No later than 60 days following the
9filing of a petition under this section, the court shall issue
10an order under subsection (e) if it finds by a preponderance of
11the evidence that all of the following apply:

12(1) Thirty days have passed since the declaration of a
13fiscal emergency.

14(2) There has been a failure by:

15(i) the governing body of the distressed [city]
16municipality to adopt an ordinance under section 607;

17(ii) the governing body of the distressed [city]
18municipality to implement an ordinance under section 607;
19[or]

20(iii) an elected or appointed official of the
21distressed city or authority to strictly comply with an
22order issued by the Governor under section 604[.]; or

23(iv) (Reserved).

24(3) A fiscal emergency under section 602(a) continues to
25exist.

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

27(1) set forth the findings under subsection (d);

28(2) grant the petition and declare the distressed [city]
29municipality to be in receivership;

30(3) appoint the individual named in the petition to be

1the receiver for a period not to exceed two years, subject to
2extension under section 710(b);

3(4) direct the receiver to develop a recovery plan
4within 30 days under section 703 and submit it to the court,
5the secretary, the governing body and, if applicable, the
6chief executive officer of the distressed [city]
7municipality; and

8(5) require and empower the receiver to implement the
9emergency action plan developed by the secretary under
10section 602 until a recovery plan developed by the receiver
11is approved by the court under section 703.

12(f) Additional actions.--

13(1) The Governor may direct the secretary to file a
14petition in Commonwealth Court to appoint an individual named
15in the petition as a receiver for the distressed [city]
16municipality if the distressed [city] municipality fails to
17comply with or has amended the ordinance without the approval
18of the secretary under section 607(d)(3) or (4).

19(2) The court shall conduct a hearing on the petition
20under paragraph (1) within 15 days of the filing of the
21petition.

22(3) No later than 60 days following the filing of the 
23petition under paragraph (1), the court shall issue an order 
24under subsection (e) if it finds by a preponderance of the 
25evidence that the distressed [city] municipality has failed 
26to comply with section 607(d)(3) or (4).

27Section 703. Recovery plan.

28(a) Issuance.--Within 30 days of the appointment of the
29receiver, the recovery plan required under section 702(e)(4)
30shall be furnished to Commonwealth Court, the secretary and the

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

3(b) Contents.--The receiver shall consider the plan prepared
4by the coordinator under section 241 and any other existing
5alternate plans in the development of the recovery plan. The
6following shall apply:

7(1) The recovery plan shall provide for all of the
8following:

9(i) Continued provision of vital and necessary
10services.

11(ii) Payment of the lawful financial obligations of 
12the distressed [city] municipality and authorities. This 
13subparagraph includes debt obligations, municipal 
14securities, lease rental obligations, legal obligations 
15and consensual modifications of existing obligations.

16(iii) Timely deposit of required payments to the
17pension fund in which the distressed [city] municipality
18and each authority participates.

19(2) The recovery plan may include:

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

23(ii) the approval, modification, rejection,
24renegotiation or termination of contracts or agreements
25of the distressed [city] municipality or authorities,
26except to the extent prohibited by the Constitutions of
27the United States and Pennsylvania;

28(iii) the execution of new contracts or agreements;
29and

30(iv) other information the receiver deems

1appropriate.

2(c) Restrictions.--The recovery plan may not do any of the
3following:

4(1) Unilaterally levy taxes.

5(2) Unilaterally abrogate, alter or otherwise interfere
6with a lien, charge, covenant or relative priority that is:

7(i) held by a holder of a debt obligation of a
8distressed [city] municipality; and

9(ii) granted by the contract, law, rule or
10regulation governing the debt obligation.

11(3) Unilaterally impair or modify existing bonds, notes,
12municipal securities or other lawful contractual or legal
13obligations of the distressed [city] municipality or
14authority[, except as otherwise ordered by a court of
15competent jurisdiction].

16(4) Authorize the use of the proceeds of the sale,
17lease, conveyance, assignment or other use or disposition of
18the assets of the distressed [city] municipality or authority
19in a manner contrary to section 707.

20(d) Confirmation.--Commonwealth Court shall conduct a
21hearing on the recovery plan within 30 days of the receipt of
22the plan from the receiver. The court shall confirm the plan
23within 60 days of the receipt of the plan unless it finds clear
24and convincing evidence that the plan is arbitrary, capricious
25or wholly inadequate to alleviate the fiscal emergency in the
26distressed [city] municipality.

27(e) Modification of plan.--The receiver shall notify the
28Commonwealth Court of any modification to the plan. The court
29may conduct a hearing on the modification within 30 days of its
30receipt. The court shall confirm the modification within 60 days

1of receipt of notification of the modification unless it finds
2clear and convincing evidence that the recovery plan as modified
3is arbitrary, capricious or wholly inadequate to alleviate the
4fiscal emergency in the distressed [city] municipality.

5Section 704. Confirmation.

6(a) Effect of confirmation.--The confirmation of the
7recovery plan and any modification to the receiver's plan under
8section 703 shall have the effect of:

9(1) imposing on the elected and appointed officials of
10the distressed [city] municipality or an authority a
11mandatory duty to undertake the acts set forth in the
12recovery plan;

13(2) suspending the authority of the elected and
14appointed officials of the distressed [city] municipality or
15an authority to exercise power on behalf of the distressed
16[city] municipality or authority pursuant to law, charter,
17ordinance, rule or regulation to the extent that the power
18would interfere with the powers granted to the receiver or
19the goals of the recovery plan; and

20(3) superseding the emergency action plan developed by
21the secretary under section 602.

22(b) Form of government.--Confirmation of the recovery plan
23and any modification to the plan under section 703 shall not be
24construed to:

25(1) change the form of government of the distressed
26[city] municipality or an authority; or

27(2) except as set forth in subsection (a), affect powers
28and duties of elected and appointed officials of the
29distressed [city] municipality or an authority.

30(c) Collective bargaining.--A collective bargaining

1agreement or arbitration settlement executed after confirmation
2of a recovery plan may not, in any manner, violate, expand or
3diminish the provisions of the recovery plan, provided, however, 
4that the provisions of section 252 shall apply to any recovery 
5plan adopted in accordance with this chapter.

6Section 705. Receiver.

7* * *

8(g) Liability.--The receiver shall not be liable personally 
9for any obligations of the distressed [city] municipality or 
10authority. It is declared to be the intent of the General 
11Assembly that the receiver shall enjoy sovereign and official 
12immunity as provided in 1 Pa.C.S. § 2310 (relating to sovereign 
13immunity reaffirmed; specific waiver) and shall remain immune 
14from suit except as provided by and subject to the provisions of 
1542 Pa.C.S. Ch. 85 Subchs. A (relating to general provisions) and 
16B (relating to actions against Commonwealth parties).

17Section 706. Powers, duties and prohibited actions.

18(a) Powers and duties.--Notwithstanding any other provision
19of law, the receiver shall have the following powers and duties:

20(1) To require the distressed [city] municipality or
21authority to take actions necessary to implement the recovery
22plan under section 703.

23(2) To modify the recovery plan as necessary to achieve
24financial stability of the distressed [city] municipality and
25authorities in accordance with section 703.

26(3) To require the distressed [city] municipality or
27authority to negotiate intergovernmental cooperation
28agreements between the distressed [city] municipality and
29other political subdivisions in order to eliminate and avoid
30deficits, maintain sound budgetary practices and avoid

1interruption of municipal services.

2(4) To submit quarterly reports to the governing body
3and, if applicable, the chief executive officer of the
4distressed [city] municipality and to the department. The
5reports shall be posted on [the] a publicly accessible
6Internet website [for] maintained by the distressed [city]
7municipality.

8(5) To require the distressed [city] municipality or
9authority to cause the sale, lease, conveyance, assignment or
10other use or disposition of the distressed [city's]
11municipality's or authority's assets in accordance with
12section 707.

13(6) To approve, disapprove, modify, reject, terminate or
14renegotiate contracts and agreements with the distressed
15[city] municipality or authority, except to the extent
16prohibited by the Constitutions of the United States and
17Pennsylvania.

18(7) To direct the distressed [city] municipality or
19authority to take any other action to implement the recovery
20plan.

21(8) To attend executive sessions of the governing body
22of the distressed [city] municipality or authority and make
23reports to the public on implementation of the recovery plan.

24(9) [After July 1, 2012, to] To file a municipal debt 
25adjustment action under the Bankruptcy Code (11 U.S.C. § 101 
26et seq.) and to act on the [city's] municipality's behalf in 
27the proceeding. The power under this paragraph shall only be 
28exercised upon the written authorization of the secretary. 
29The filing of a municipal debt adjustment action under this 
30paragraph and any plan of the receiver accepted by the
 

1Federal court shall be considered a modification of the 
2recovery plan, except that the modification shall not be 
3subject to judicial review under section 709. A recovery plan 
4submitted to and approved by the Federal court under a 
5Federal municipal debt adjustment action may include Federal 
6remedies not otherwise available under this chapter.

7(10) To meet and consult with the advisory committee
8under section 711.

9(11) To employ financial or legal experts deemed
10necessary to develop and implement the recovery plan.
11Notwithstanding any law to the contrary, the employment of
12such experts shall not be subject to contractual competitive
13bidding procedures.

14(12) To make a recommendation to the secretary that the
15municipality be disincorporated in accordance with Chapter 4.

16(b) Authorization prohibited.--Neither this chapter nor the
17recovery plan shall be interpreted to authorize the receiver to
18do any of the following:

19(1) Unilaterally levy taxes.

20(2) Unilaterally abrogate, alter or otherwise interfere
21with a lien, charge, covenant or relative priority that is:

22(i) held by a holder of a debt obligation of a
23distressed [city] municipality; and

24(ii) granted by the contract, law, rule or
25regulation governing the debt obligation.

26(3) Unilaterally impair or modify existing bonds, notes,
27municipal securities or other lawful contractual or legal
28obligations of the distressed [city] municipality or
29authority[, except as otherwise ordered by a court of
30competent jurisdiction].

1(4) Authorize the use of the proceeds of the sale, 
2lease, conveyance, assignment or other use or disposition of 
3the assets of the distressed [city] municipality or authority 
4in a manner contrary to section 707.

5Section 707. Use or disposition of assets.

6(a) Use of proceeds.--The proceeds from any sale, lease,
7conveyance, assignment or other use or disposition of assets of
8the distressed [city] municipality or authority shall be applied
9to the payment of outstanding debt obligations owed by the
10distressed [city] municipality or authority, subject to any
11lien, charge, covenant, restriction, contract, law, rule or
12regulation, that encumbers or is otherwise applicable to the
13assets. Proceeds remaining after payment of outstanding debt
14obligations owed by the distressed [city] municipality or
15authority may be used by the receiver to restructure or provide
16escrow for the payment of future debt obligations or to meet
17operating and capital needs of the distressed [city]
18municipality or authority.

19(b) Prohibitions.--Nothing under this section shall be
20construed to authorize the receiver to unilaterally abrogate,
21alter or otherwise interfere with a lien, charge, covenant or
22relative priority that is:

23(1) held by a holder of a debt obligation of a
24distressed [city] municipality; and

25(2) granted by the contract, law, rule or regulation
26governing the debt obligation.

27Section 708. Elected and appointed officials.

28(a) Orders.--The receiver may issue an order to an elected
29or appointed official of the distressed [city] municipality or
30an authority to:

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

2(2) refrain from taking any action that would interfere
3with the powers granted to the receiver or the goals of the
4recovery plan.

5(b) Enforcement.--An order issued under subsection (a) shall
6be enforceable under section 709.

7Section 709. Judicial actions.

8(a) Action by receiver.--The receiver may petition
9Commonwealth Court to issue a writ of mandamus upon any elected
10or appointed official of the distressed [city] municipality or
11authority to secure compliance with an order issued under
12section 708. The court shall grant or deny the relief within 14
13days of the filing of the petition. The court shall grant the
14relief requested if it determines that the order was issued in
15compliance with this chapter.

16(b) Action by elected or appointed officials.--Any elected 
17or appointed official of a distressed [city] municipality or 
18authority may petition Commonwealth Court to enjoin any action 
19of the receiver that is contrary to this chapter.

20Section 30.1. Section 710 of the act is amended to read:

21Section 710. Termination of receivership.

22(a) Time.--Except as provided under subsection (b) or (c),
23the receivership under this chapter shall expire two years after
24the appointment of the receiver.

25(b) Extension.--The secretary may petition Commonwealth 
26Court for one or more extensions of the receivership. The court 
27shall grant each extension [for] of up to another two years if 
28the secretary establishes by a preponderance of the evidence 
29that further implementation of the recovery plan is necessary 
30to end the fiscal emergency.

1(c) Termination of fiscal emergency.--Notwithstanding the
2date of expiration of receivership under subsection (a) or an
3extension of receivership under subsection (b), the receivership
4shall terminate upon the secretary's termination of a fiscal
5emergency under section 608(a).

6Section 31. The act is amended by adding a section to read:

7Section 710.1. Continuation of recovery plan.

8(a) Administrative determination required.--Within 30 days
9of the termination or expiration of the receivership under
10section 710, the secretary shall issue one of the following
11administrative determinations:

12(1) conditions within the municipality warrant a
13termination in status in accordance with section 255.1; or

14(2) the municipality continues to be financially
15distressed.

16(b) Appointment of coordinator.--Upon a determination under
17subsection (a)(2), a recovery plan adopted under section 703 and
18confirmed by Commonwealth Court shall remain in effect and shall
19be deemed to be a plan adopted under Chapter 2. The secretary
20shall appoint a coordinator in accordance with section 221. The
21receiver may be appointed as coordinator. The coordinator shall
22implement the recovery plan under section 247(a) subject to the
23following:

24(1) The plan shall be subject to amendment in accordance
25with section 249, provided that nothing in this section shall
26authorize the impairment of existing lawful contractual or
27legal obligations of the distressed municipality except where
28otherwise permitted by law.

29(2) The coordinator may exercise the same powers and
30duties of this chapter as a receiver for the purposes of

1issuing orders under section 708, and seek enforcement of
2such orders under section 709. The Commonwealth Court shall
3retain jurisdiction to hear an action under this paragraph.

4(3) The plan shall terminate as provided in section
5254(b)(2).

6Section 32. Sections 711(a) and (b) and 712(a)(1) of the 
7act, added October 20, 2011 (P.L.312, No.79), are amended to 
8read:

9Section 711. Municipal financial recovery advisory committee.

10(a) Establishment.--[There is established a] A municipal
11financial recovery advisory committee is established to meet and
12consult with the receiver in carrying out the duties under this
13chapter. The sole function of the advisory committee shall be to
14provide recommendations and feedback to the receiver on the
15implementation of the recovery plan.

16(b) Composition.--The advisory committee established under
17subsection (a) shall be comprised of the following:

18(1) The chief executive officer, if any, of the
19distressed [city] municipality or a designee.

20(2) The president of the governing body of the
21distressed [city] municipality or a designee.

22(3) One member appointed by the county commissioners of
23the county where the distressed [city] municipality is
24located.

25(4) One member appointed by the Governor.

26* * *

27Section 712. Applicability.

28(a) Statement.--

29(1) This chapter shall apply only to distressed [cities]
30municipalities.

1* * *

2Section 33. This act shall apply as follows:

3(1) The addition of section 122(c) of the act shall
4apply to any and all regulations in effect on the effective
5date of this section.

6(2) The amendment or addition of sections 608, 710 and
7710.1(a) and (b) of the act shall not apply to a municipality
8that entered receivership prior to the effective date of this
9section and shall not supersede or constitute grounds to
10modify any order of court issued prior to the effective date
11of this section.

12Section 34. For tax years beginning after the effective date
13of this section, a financially distressed municipality shall be
14prohibited from using the special taxing authority in section
15607(f) of the act of December 18, 1984 (P.L.1005, No.205), known
16as the Municipal Pension Plan Funding Standard and Recovery Act,
17to impose an increase in the rate, over the rate imposed as of 
18June 30, 2014, of taxation on nonresident income unless an equal
19or greater increase in the rate of taxation on resident income,
20over the highest rate levied in the previous fiscal year, is
21imposed in the same tax year.

22Section 35. The addition of section 255.1 of the act shall
23not apply to determinations issued by the Secretary of Community
24and Economic Development prior to the effective date of this
25section or to appeals pending on the effective date of this
26section.

27Section 36. This act shall take effect as follows:

28(1) Section 34 of this act and this section shall take
29effect immediately.

30(2) The remainder of this act shall take effect in 60

1days.