PRIOR PRINTER'S NO. 1184
PRINTER'S NO. 1583
THE GENERAL ASSEMBLY OF PENNSYLVANIA
INTRODUCED BY TEPLITZ, FOLMER, BLAKE, EICHELBERGER, BOSCOLA, YUDICHAK, WOZNIAK, SOLOBAY, BREWSTER, FARNESE AND WAUGH, JUNE 7, 2013
SENATOR EICHELBERGER, LOCAL GOVERNMENT, REPORTED AS AMENDED, NOVEMBER 19, 2013
<-1Amending the act of June 25, 1919 (P.L.581, No.274), entitled
2"An act for the better government of cities of the first
3class of this Commonwealth," providing for a prohibition on
4interest rate swap agreements.
13Section 10. No city of the first class may enter into an
14interest rate management agreement, including a swap, interest
15rate cap, collar, corridor, ceiling and floor agreement, forward
16agreement and float agreement.
2Section 3. This act shall take effect in 60 days.
<-3Section 1. Definitions.
9"Interest rate management agreement." An agreement,
10including a confirmation evidencing a transaction effected under
11a master agreement, entered into by a first class city or county
12in accordance with and fulfilling the requirements of section 2,
13which agreement in the judgment of the first class city or
14county is designed to manage interest rate risk or interest cost
15of the first class city or county on any debt or other debt-
16related obligations a first class city or county is authorized
17to incur, including, but not limited to, swaps, interest rate
18caps, collars, corridors, ceiling and floor agreements, forward
19agreements, float agreements and other similar arrangements
20which in the judgment of the first class city or county will
21assist the first class city or county in managing the interest
22rate risk or interest cost of the first class city or county.
23Section 2. Interest rate management agreement requirements.
24(a) General rule.--Notwithstanding any other law to the
25contrary, any interest rate management agreement entered into by
26a first class city or county shall comply with the provisions of
28(b) Requirements.--The following requirements shall apply:
1agreement or any confirmation of a transaction.
2(2) No payments shall be made to or on behalf of a first
3class city or county by the other party to an interest rate
4management agreement except periodic scheduled payments,
5termination payments and attorney fees and other consultant
6fees incurred in connection with entering into an interest
7rate management agreement.
8(3) Periodic scheduled payments on an interest rate
9management agreement must commence not later than three years
10after the date of the confirmation associated with the
11interest rate management agreement.
12(4) The index or basis used for calculating the periodic
13scheduled payments receivable by the first class city or
14county on an interest rate management agreement shall be
15substantially similar to the index or basis used for
16calculating the interest due on the associated debt or other
17debt-related obligations of the first class city or county.
18(5) At the time an interest rate management agreement is
19entered into, the sum of the notional amount thereof, without
20duplication for the notional amount of any offsetting
21transactions, and all other interest rate management
22agreements entered into or guaranteed, and then in effect of
23a first class city or county, shall not exceed 30% of the
24total principal amount of the aggregate general obligation
25debt and other debt-related obligations payable from or
26supported by its general fund then outstanding. If an
27interest rate management agreement is payable from or
28supported by another specified fund or revenues, the
29limitation shall apply based solely on interest rate
30management agreements and debt and other debt-related
10(ii) If the interest rate management agreement
11described under subparagraph (i) has been terminated and
12none of the related debt or debt-related obligations are
13outstanding, pay periodic swap payments on interest rate
14management agreements or principal and interest on debt
15or debt-related obligations payable from or supported by
16the same fund or revenues as the interest rate management
17agreement described under subparagraph (i).
18(iii) If all of the interest rate management
19agreements described under subparagraph (ii) have been
20terminated and no debt or debt-related obligations
21described under subparagraph (ii) are outstanding, pay
22any other obligations of the first class city or county.
23(7) The scheduled expiration date of an interest rate
24management agreement shall not exceed ten years from the date
25of the related confirmation unless the interest rate
26management agreement contains a provision allowing the first
27class city or county to terminate the same at any time after
28ten years from the date of the related confirmation without
29making a termination payment.
30(8) An interest rate management agreement shall contain
8(ii) Acknowledges that it has read this act.
9(iii) Acknowledges that a first class city or county
10may only enter into an interest rate management agreement
11to manage interest rate risk or interest cost of the
12first class city or county on debt or other debt-related
13obligations of the first class city or county.
14(iv) Acknowledges and agrees that it will notify the
15department, in writing, promptly upon the payment to the
16other party of a termination payment by the first class
17city or county, including the date and amount of the
18payment and the identity of the interest rate management
19agreement under which the payment was made.
20Section 3. Notice and retention of records.
21(a) Notice.--Within 15 days following the adoption of a
22resolution authorizing an interest rate management agreement, a
23first class city or county shall file with the department
24certified copies of the resolution, including any appendix to
25the resolution together with an itemized statement of all
26attorney fees, consultant fees and any other costs expected to
27be paid on behalf of a first class city or county by the other
28party to such interest rate management agreement.
1as an interest rate management agreement is in effect.
2Section 4. Financial reporting.
3A first class city or county which has entered into an
4interest rate management agreement shall include in its annual
5financial statements information with respect to each interest
6rate management agreement it has authorized or entered into,
7including any information required pursuant to any statement
8issued by the Governmental Accounting Standards Board.
9Section 5. Applicability.
10The following shall apply:
14(2) This act shall not apply to any amendment,
15termination or novation of an interest rate management
16agreement where such interest rate management agreement was
17entered into prior to the effective date of this act as long
18as the term of the interest rate management agreement is not
20Section 6. Effective date.
21This act shall take effect in 60 days.