1Amending Title 53 (Municipalities Generally) of the Pennsylvania
2Consolidated Statutes, providing for preliminary
3authorization to incur debt and for guaranty fees prohibited;
4and further providing for records of department.

5The General Assembly of the Commonwealth of Pennsylvania
6hereby enacts as follows:

7Section 1. Title 53 of the Pennsylvania Consolidated
8Statutes is amended by adding sections to read:

9§ 8010. Preliminary authorization to incur debt.

10(a) Requirements.--The following shall apply:

11(1) Before a local government unit may incur debt, it
12shall file a notice with the department of the local
13government unit's intention to incur debt.

14(2) The notice under paragraph (1) shall be in the form
15of a certificate signed by two officers of the local
16government unit. The certificate shall include a basic
17description of the intended financing. The department may
18prescribe the form of the certificate.

19(3) A local government unit may not proceed to incur the

1debt until it receives a preliminary approval from the
2department.

3(4) The department shall complete its review of the
4filing within 30 days. If the department is unable to
5complete its review within 30 days, it shall notify the
6applicant of the need to extend the review, the amount of
7time that will be needed to complete the review and the
8reason for the extended time. The department may extend its
9review up to an additional 60 days for a total of 90 days to
10review each certificate.

11(b) Audited financial statements.--As part of the filing
12under subsection (a), a local government unit shall include a
13copy of the local government unit's most recent audited
14financial statements. If the department determines that the most
15recent audited financial statements of a local government unit
16do not cover a recent enough fiscal year or years, the
17department may prohibit the local government unit from incurring
18debt until audited financial statements covering the designated
19fiscal year are filed with the department.

20(c) Disclosure obligation compliance.--As part of the filing
21under subsection (a), a local government unit shall include
22information demonstrating to the satisfaction of the department
23that the local government unit is in compliance with its
24disclosure obligations with respect to its outstanding debt
25under 17 CFR 240.15c2-12 (relating to municipal securities
26disclosure) or any successor regulation. If the department is
27not satisfied that the local government unit is in compliance
28with the disclosure obligations, the department may prohibit the
29local government unit from incurring debt until the local
30government unit provides the department with proof of compliance

1satisfactory to the department.

2(d) Subsidized or self-liquidating debt.--If a local
3government unit intends that the debt to be issued shall be
4subsidized debt or self-liquidating debt under section 8024
5(relating to exclusion of subsidized debt from net nonelectoral
6debt or net lease rental debt), 8025 (relating to exclusion of
7self-liquidating debt evidenced by revenue bonds or notes to
8determine net nonelectoral debt) or 8026 (relating to exclusion
9of other self-liquidating debt to determine net nonelectoral
10debt or net lease rental debt), the local government unit shall
11include, as part of the filing under subsection (a), information
12demonstrating to the satisfaction of the department that the
13debt shall, in fact, be subsidized or self-liquidating.

14(e) Treatment.--A local government unit shall include, as
15part of the filing under subsection (a):

16(1) If the local government unit has outstanding debt
17which has previously been excluded as subsidized debt or
18self-liquidating debt, information demonstrating to the
19satisfaction of the department that the debt should continue
20to be treated as subsidized or self-liquidating and that no
21decrease in the amounts to be excluded is required by any
22change in circumstances, other than decreases resulting from
23the payments of the debt.

24(2) If there has been a change to the outstanding debt,
25information demonstrating to the satisfaction of the
26department of the amount of debt that should continue to be
27treated as subsidized or self-liquidating.

28(f) Refunding debt.--If the local government unit intends
29that the debt to be issued shall be refunding debt for a purpose
30other than as provided under section 8241(b)(1) (relating to

1power to refund), the local government unit shall include, as
2part of the filing under subsection (a), information
3demonstrating to the satisfaction of the department that the
4intended refunding is a sound financial transaction and is in
5the best long-term financial interest of the local government
6unit.

7(g) Working capital.--If the local government unit intends
8that the debt to be issued shall provide that more than 10% of
9the proceeds of the debt will be used for working capital, the
10local government unit shall include, as part of the filing under
11subsection (a), information demonstrating to the satisfaction of
12the department that the intended financing is a sound financial
13transaction and is in the best long-term financial interest of
14the local government unit.

15(h) Additional information and conference.--After receipt by
16the department of a filing under subsection (a), the department
17may request and the local government unit shall provide
18additional information, certificates, documents, reports and
19opinions which the department deems necessary or useful in its
20review of the filing. The department may require that
21representatives of the local government unit participate in a
22conference with the department.

23(i) Review and oversight.--The following shall apply:

24(1) The purpose of the initial review under subsection
25(a)(1) shall be to avoid situations in which a local
26government unit does any of the following:

27(i) Enters the debt market without being properly
28prepared.

29(ii) Has or proposes debt which is improperly
30treated as subsidized or self-liquidating.

1(iii) Enters into an unsound financial transaction.

2(iv) Enters into a financial transaction which is
3not in the best long-term financial interest of the local
4government unit.

5(2) The oversight by the department under this section
6is intended to promote the financial stability and credit
7strength of the local government unit making a filing under
8subsection (a) and to promote the financial stability and
9credit strength of all local government units in this
10Commonwealth.

11(j) Approval or disapproval.--If the department, upon review
12of the filing under subsection (a), as supplemented by any
13additional information provided by the local government unit
14under subsection (h), finds that the purposes under subsection
15(i) are satisfied by the proposed debt, the department shall
16issue a preliminary approval of the debt. If the department
17finds that the purposes under subsection (i) are not satisfied
18by the proposed debt, the department shall issue a preliminary
19disapproval of the debt and the local government unit may not
20proceed to incur the debt.

21(k) Time period.--Upon issuance of a preliminary approval by
22the department under subsection (j), the local government unit
23shall have six months to incur the debt under this subpart.

24(l) Review.--All determinations by the department under this
25section shall be reviewable as provided under 2 Pa.C.S. Ch. 7
26(relating to judicial review).

27§ 8011. Guaranty fees prohibited.

28No fee may be paid to a local government unit from the
29proceeds of debt of a local government unit or debt of an
30authority in consideration of the local government unit

1providing a guaranty or lease or other payment obligation with
2respect to the debt.

3Section 2. Section 8207(a) of Title 53 is amended and the
4section is amended by adding a subsection to read:

5§ 8207. Records of department.

6(a) Retention period.--[The department shall keep all
7proceedings on file for a period of not less than four months
8after issuance of its certificate of approval or disapproval and
9thereafter as long as any appeal respecting the proceedings is
10pending and not finally determined.] The department shall retain 
11its records related to any debt proceeding under this subpart 
12for:

13(1) at least five years after the debt has been paid in
14full and any debt refunding the debt has been paid in full;
15or

16(2) if the debt was disapproved, five years after the
17date of disapproval.

18* * *

19(d) Public access to determination.--Upon completion of its
20review under section 8010 (relating to preliminary authorization
21to incur debt), the department shall post on its Internet
22website a copy of its approved certification to incur debt. The
23department shall include an explanation for the disapproval or
24delay for certifications disapproved or not approved within the
25stipulated timeline.

26Section 3. This act shall take effect in 60 days.