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
25act empowering the Department of Community [Affairs] and
 

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

13Section 2. Section 102 of the act, amended Oct. 20, 2011 
14(P.L.318, No.79), is amended to read:

15Section 102. Purpose and legislative intent.

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

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

28(1) It is the intent of the General Assembly to:

29(i) Enact procedures to provide municipalities
30showing early indicators of financial distress with

1training and technical and financial assistance.

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

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

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

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

24(2) Changing and deteriorating economic conditions,
25developing technologies and attendant unemployment erode
26local tax bases and threaten essential municipal services.
27Under such circumstances, such distressed governmental units
28may no longer be viable and that the citizens of those
29communities should be granted the opportunity in accordance 
30with law to voluntarily consolidate or merge their

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

8(3) Policies of certain municipalities are so
9ineffective and the financial conditions so severe that the
10provision of vital and necessary services is threatened.

11(4) Sustained failure of a municipality to enact or
12implement a fiscal plan to adequately address or prevent
13insolvency after repeated opportunities to do so:

14(i) constitutes a fiscal emergency; and

15(ii) signifies:

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

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

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

23(5) Pursuant to the Commonwealth's paramount right and
24duty to maintain law and order and protect and preserve the
25health, safety and welfare of its citizens and ensure
26compliance with this act under Article IX of the Constitution
27of Pennsylvania, the Governor is authorized to act in the
28face of a fiscal emergency under paragraph (4)(i) and
29dereliction of official duty under paragraph (4)(ii)(B).

30(6) Municipalities may face such deteriorated economic
 

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

9Section 3. Section 103 of the act, repealed Oct. 13, 1994
10(P.L.596, No.90) and added July 5, 2012 (P.L.1104, No.133), is 
11amended to read:

12Section 103. Definitions.

13The following words and phrases when used in this act shall
14have the meanings given to them in this section unless the
15context clearly indicates otherwise:

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

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

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

27"Chief executive officer." Mayor in a mayor-council form of
28government or manager in a council-manager form of government of
29a city operating under an optional form of government pursuant
30to the act of July 15, 1957 (P.L.901, No.399), known as the

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

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

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

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

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

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

30"Expenditures." Reductions in fund equity, including current

1operating expenses that require the use of fund equity, debt
2service and capital outlays. The term shall not include
3interfund transfers.

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

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

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

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

25(1) Confidential information relating to personnel
26matters and matters relating to the initiation and conduct of
27investigations of violations of law. To the extent such 
28information is included in a financial record or document 
29otherwise subject to this definition, it shall be redacted 
30and the remainder subject to disclosure as otherwise provided
 

1by this act.

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

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

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

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

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

18Section 4. Section 121(a), (b), (c) and (h) of the act are
19amended to read:

20Section 121. Powers and duties of department.

21(a) Compile financial data.--

22(1) A power and duty of the department shall be to
23maintain accurate and current information and data on the
24fiscal status of municipalities to determine if criteria set
25forth in section 201 exist and, if so, whether the existence
26of those factors validly indicates fiscal distress.

27(2) In compiling the information and data, the
28department shall mail, before January 1 of each year, a
29Survey of Financial Condition form to each municipality
30applicable to the municipality's prior fiscal year.

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

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

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

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

14(b) Assess data.--A power and duty of the department shall
15be to apply the criteria of section 201 to data and information
16on the fiscal status of municipalities to assess the validity
17and applicability of an indication of municipal financial
18distress. In assessing validity and applicability, the
19department shall undertake a review process, including, but not
20limited to, consultation, correspondence and visits with a
21municipality which appears to be financially distressed,
22notwithstanding the provisions of section 2501-C(e) and (f) of
23the act of April 9, 1929 (P.L.177, No.175), known as The
24Administrative Code of 1929, which limits department
25intervention to incidences when such is requested by the
26municipality. If the department [assesses] determines that a
27municipality needs assistance to correct minor fiscal problems,
28the department shall offer appropriate recommendations, 
29including a recommendation that the municipality submit an 
30application as provided in Chapter 1-A. If the municipality

1adopts those recommendations, the department need take no
2further action.

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

11* * *

12(h) Promulgate rules and regulations.--The department shall
13[promulgate]:

14(1) Within 90 days of the effective date of this
15paragraph, and with the assistance of the Department of
16Revenue, promulgate rules and regulations for the
17administration and enforcement of a tax as provided in
18section 124. The rules and regulations shall include:

19(i) The form and contents of a return.

20(ii) A method for the reexamination and correction
21of returns and payments alleged or found to be incorrect,
22or as to which an overpayment is claimed or found to have
23occurred.

24(iii) Rules for appeals of vendors aggrieved by any
25decision of the tax collector and for review of petitions
26for abatement of interest and penalties, compromise and
27refund of the tax in a manner consistent with 53 Pa.C.S.
28Ch. 84 Subch. C (relating to local taxpayer bill of
29rights). For purposes of the application of 53 Pa.C.S.
30Ch. 84 Subch. C, the tax levied in accordance with

1section 124 shall be considered an "eligible tax" and
2vendors shall be considered "taxpayers" as those terms
3are defined in 53 Pa.C.S. § 8422 (relating to
4definitions).

5(2) Promulgate other rules and regulations necessary to
6implement the provisions of this act.

7Section 5. Section 122 of the act is amended by adding a
8subsection to read:

9Section 122. Duties of Commonwealth agencies.

10* * *

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

12(1) Notwithstanding any provision of law and at the
13request of the coordinator or receiver, a Commonwealth agency
14may exempt a distressed municipality from the application of
15a regulatory requirement, if the following conditions are
16satisfied:

17(i) The regulatory requirement is not expressly
18required by Federal law or regulation, or an act of the
19Commonwealth, and is not related to the rights or terms
20and conditions of employment by the municipality.

21(ii) The waiver of the regulatory mandate will not
22likely affect public health and safety.

23(2) It is the intent of this subsection that distressed
24municipalities be considered for relief from regulatory
25mandates that, due to financial distress or the
26implementation of recovery measures, are unduly burdensome on
27the municipality and would not undermine the regulatory
28purposes of the agency if waived.

29Section 6. Section 123 of the act, amended July 11, 1996
30(P.L.645, No.108), is amended to read:

1Section 123. Powers and duties of municipalities.

2(a) File completed survey.--On or before March 15 of each
3year, every municipality shall return to the department a
4completed Survey of Financial Conditions referred to in section
5121(a). No municipality shall receive its alloted payments
6pursuant to the act of June 1, 1956 (1955 P.L.1944, No.655),
7referred to as the Liquid Fuels Tax Municipal Allocation Law,
8unless it complies with the provisions of this section,
9notwithstanding a provision of law to the contrary, including 
10any provisions which require payment prior to March 15, and the
11Department of Transportation may not disburse funds to a
12municipality pursuant to the Liquid Fuels Tax Municipal
13Allocation Law until notified by the department that the
14municipality has complied with the provisions of this section.

15(b) File applications for grants and loans.--A financially
16distressed municipality may apply to the secretary for emergency
17financial aid in the form of a grant or loan pursuant to Chapter
183.

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

20(1) After a municipality has adopted a plan under
21[Subchapter C] Subchapters C and C.1 of Chapter 2, it may
22petition the court of common pleas of the county in which the
23municipality is located to increase its rates of taxation for
24earned income of residents and nonresidents, real property,
25or both, beyond maximum rates provided by law.

26(1.1) In addition to the right under paragraph (1), a
27municipality may petition the court to increase the rate of a
28local services tax and levy a payroll preparation tax as
29provided in subsection (d) or an optional alcohol consumption
30tax as provided in section 124.

1(2) If a tax increase above existing limits is granted
2by the courts or a tax is approved as provided in subsection 
3(d) or section 124, the increase shall be effective for a
4period of one year. The one-year increase shall run from the
5date specified in the petition filed with the court or, if no
6such date is specified, from the beginning of the current
7fiscal year of the municipality. Subsequent increases in
8rates of taxation or the imposition of a tax under subsection 
9(d) or section 124 may be granted by the court upon annual
10petition of the municipality until the termination date of 
11the plan adopted by the municipality under Chapter 2. The
12additional amount of taxes resulting from the petition shall
13not be subject to sharing with a school district.

14(3) A petition filed by a city of the second class A or 
15a home rule municipality that was previously a city of the 
16second class A under this subsection may not include an
17increase in a tax on nonresident income unless the
18municipality certifies to the court, with regard to those
19provisions of the plan having a measurable fiscal impact,
20that:

21(i) the municipality has substantially implemented
22the provisions which are within the authority of the
23chief executive officer or governing body, including, but
24not limited to, provisions of the plan that call for
25increasing existing tax rates levied on residents and
26increasing fees charged by the municipality;

27(ii) the municipality has taken those actions
28required to obtain the approval of other parties for
29those provisions which may not be implemented without
30such approval, including, but not limited to, the

1approval of a court, local electors or any collective
2bargaining unit; and

3(iii) the additional income from the aforementioned
4actions is insufficient to balance the municipal budget,
5necessitating additional revenue from an increase in the
6tax on nonresident income.

7(d) Additional tax options and limitations.--After a
8municipality has adopted a plan under Subchapter C or C.1 of
9Chapter 2 and with the approval of the court, it may adopt an
10ordinance imposing any of the following:

11(1) A local services tax pursuant to Chapter 3 of the
12act of December 31, 1965 (P.L.1257, No.511), known as The
13Local Tax Enabling Act, at a rate not to exceed $156. A
14municipality adopting an ordinance under this paragraph shall
15be prohibited from imposing any additional tax on earned
16income pursuant to subsection (c). A municipality levying the
17local services tax at a rate in excess of $52 shall, by
18ordinance, exempt any person from the local services tax
19whose total earned income and net profits from all sources
20within the municipality is less than $15,600 for the calendar
21year in which the local services tax is levied.

22(2) A payroll preparation tax pursuant to section 303 of
23the Local Tax Enabling Act. A municipality imposing a tax
24under this paragraph may levy a tax at a rate as provided in
25this section and as certified by the coordinator and approved
26by the court. When imposing a tax under this paragraph the
27municipality may impose the tax not to exceed a rate that is
28sufficient to produce revenues equal to revenues collected as
29a result of a business privilege tax and a mercantile tax
30under Chapter 3 of the Local Tax Enabling Act in the

1preceding fiscal year. A municipality adopting a payroll
2preparation tax under this paragraph shall suspend the levy
3of a business privilege tax or mercantile tax until
4expiration of the payroll preparation tax authorized under
5this paragraph at which time the municipality may resume its
6levy of the business privilege tax or mercantile tax. The
7authority provided by this paragraph is limited to those
8municipalities levying a business privilege or mercantile
9tax, on a flat-rate or millage basis, in the year of the
10filing of a petition as provided in subsection (c).

11(3) A tax on the retail sale of alcohol as provided in
12section 124. The authority provided in this paragraph:

13(i) Shall be granted in lieu of any increased rate
14in a local services tax as provided in paragraph (1) or
15any increase in earned income taxes as provided in
16subsection (c).

17(ii) Shall not apply to a municipality in which any
18portion thereof is the situs of a tax levied by another
19political subdivision on the retail sale of alcohol and
20which tax is in effect on the date of a petition as
21provided in subsection (c)(1.1).

22Section 7. The act is amended by adding a section to read:

23Section 124. Optional distressed municipality alcohol
24consumption tax.

25(a) Authority to levy and collect tax.--For the tax year
26beginning on or after the effective date of this section, the
27governing body of every municipality authorized to do so by the
28court pursuant to section 123(c)(1.1), as recommended by the
29coordinator, shall be authorized to levy and collect a tax in
30the manner and at the rates provided in this section. Except as

1otherwise limited by section 123, the tax shall be in addition
2to any other tax every such municipality is authorized to levy
3and collect under any existing law. The taxes, interest and
4penalties collected under the provisions of this section shall
5be used by every such municipality for general purposes as
6provided for pursuant to this section.

7(b) Tax and rate.--The governing body of a municipality may
8authorize the levy of a tax imposed upon each separate sale at
9retail within the municipality at a rate of not more than 10% of
10the sale price, which tax shall be collected by the vendor from
11the purchaser and shall be paid over by the vendor to the tax
12collector as provided in this section.

13(c) Returns and payment of tax.--Every vendor required to
14collect and remit the tax to the tax collector shall file
15monthly returns with respect to such tax on or before the 25th
16day of the month succeeding the month with respect to which the
17return is made. The returns shall be filed with the tax
18collector on forms as established by the department and provided
19by the tax collector. Every vendor filing a return shall pay
20over to the tax collector the amount of tax shown as due thereon
21at the time the return is filed. The failure of any vendor to
22procure or receive a return form shall not excuse the vendor
23from filing a return and paying over the tax due.

24(d) Designation of tax collector and compensation.--The
25governing body shall by resolution designate the tax collector
26and establish tax collector compensation at a rate negotiated
27between the tax collector and the governing body. The rate of
28compensation shall not exceed 5% of the revenue collected from
29the tax.

30(e) Powers and duties of tax collector.--The tax collector

1shall:

2(1) Collect and receive the taxes, interest and
3penalties authorized by this section.

4(2) Enforce the provisions of this section and such
5rules and regulations governing the administration and
6enforcement of the provisions of this section as promulgated
7in accordance with section 121.

8(3) Examine the books, papers and records of any vendor
9in order to verify the accuracy of any return filed or
10ascertain the amount of tax due. Every vendor shall give to
11the tax collector the means, facilities and opportunities for
12the examinations. The tax collector may examine any person
13concerning the amount of tax due and may compel the
14production of books, papers and records and the attendance of
15all persons before the tax collector, whether as parties or
16witnesses, whom the tax collector believes to have knowledge
17relating to the amount of tax due.

18(f) Review and appeal.--The governing body of the
19municipality, in a manner consistent with 53 Pa.C.S. Ch. 84
20Subch. C (relating to local taxpayer bill of rights) and rules
21and regulations promulgated in accordance with section 121,
22shall provide for appeals of persons aggrieved by any decision
23of the tax collector and review petitions for abatement of
24interest and penalties for compromise and refund of taxes
25authorized by this section.

26(g) Interest and penalties.--

27(1) Any vendor who fails to pay over to the tax
28collector any amount of tax due on or before the last date
29prescribed for payment shall pay interest on such amount at
30the rate of 0.5% per month or fraction thereof from such last

1date to the date paid, without regard to any extension of
2time for payment.

3(2) Any vendor who fails to pay over to the tax
4collector any amount of tax due on or before the last date
5prescribed for payment shall be liable to pay a penalty of 1%
6per month or fraction thereof from such last date to the date
7paid.

8(3) The interest and penalties provided for in this
9section shall be added to the tax assessed and collected at
10the same time, in the same manner and as part of the tax.

11(h) Suit for collection.--

12(1) The governing body of the municipality may sue for
13the recovery of all taxes due under this section not paid
14when due. Any suit to recover any tax, together with interest
15and penalties, authorized under this section, from any
16vendor, shall begin within six years after the tax is due or
17within six years after a return has been filed, whichever
18date is later.

19(2) The six-year limitation period specified in
20paragraph (1) shall not apply:

21(i) Where a vendor has failed to file a report
22required under the provisions of this section.

23(ii) Where an examination of a return filed by a
24vendor and of other evidence relating to such return
25reveals a fraudulent evasion of taxes, including, but not
26limited to, substantial understatement of sales at retail
27taxed under this section.

28(3) Where suit is brought for the recovery of such tax,
29the vendor shall be liable for, and the tax collector shall
30collect, in addition to the tax assessed against the vendor,

1the costs of collection and the interest and penalties
2provided under this section.

3(i) Criminal penalties.--

4(1) Any vendor who willfully makes any false or untrue
5statement on the vendor's return shall be guilty of a
6misdemeanor and, upon conviction thereof, shall be sentenced
7to pay a fine of not more than $300 or to imprisonment for
8not more than 90 days, or both.

9(2) Any vendor who willfully fails or refuses to appear
10before the collector in person with the vendor's books,
11records or accounts for examination when required under the
12provisions of this section to do so or who willfully refuses
13to permit inspection of the books, records or accounts in the
14vendor's custody or control when the right to make the
15inspection by the collector is requested, shall be guilty of
16a misdemeanor and, upon conviction thereof, shall be
17sentenced to pay a fine of not more than $300 or to
18imprisonment for not more than 90 days, or both.

19(3) Any vendor who willfully fails or refuses to file a
20return required by this section or to collect and pay over to
21the tax collector any tax imposed under this section shall be
22guilty of a misdemeanor and, upon conviction thereof, shall
23be sentenced to pay a fine of not more than $300 or to
24imprisonment for not more than 90 days, or both.

25(j) Liquor Code violations.--Any vendor who willfully fails
26or refuses to file a return required by this section or to
27collect and pay over to the tax collector any tax imposed under
28this section commits an unlawful act under section 493 of the
29act of April 12, 1951 (P.L.90, No.21), known as the Liquor Code.
30The governing body of the municipality may notify the Liquor

1Control Board in writing that a vendor has violated this
2subsection and request that the vendor be subject to the
3enforcement provisions of the Liquor Code.

4(k) Cumulative penalties and remedies.--It is hereby
5declared to be the purpose of this section to provide cumulative
6penalties and remedies to ensure compliance by vendors with the
7requirements of this section.

8(l) Definitions.--As used in this section, the following
9words and phrases shall have the meanings given to them in this
10subsection unless the context clearly indicates otherwise:

11"Person." Any individual, limited partnership, partnership,
12association or corporation. Whenever used in a provision of this
13section prescribing or imposing a fine or imprisonment or both,
14the term as applied to "limited partnership" or "partnership,"
15shall mean the partners thereof, as applied to "association,"
16the members thereof, and as applied to "corporation," the
17officers thereof, except that, as to an incorporated club, the
18term shall mean such individual or individuals who, under the
19bylaws of the club, has jurisdiction over the possession and
20sale of liquor in the club.

21"Purchaser." A person who acquires liquor or malt and brewed
22beverages through sale at retail.

23"Sale at retail." Any transfer at retail for a consideration
24in any manner or by any means whatsoever of liquor and malt and
25brewed beverages, but the term shall not include any transaction
26which was or is subject to tax by the Commonwealth under Article
27II of the act of March 4, 1971 (P.L.6, No.2), known as the Tax
28Reform Code of 1971.

29"Tax collector." The entity responsible for the collection
30of earned income taxes under the act of December 31, 1965

1(P.L.1257, No.511), known as The Local Tax Enabling Act.

2"Tax year." The 12-month period corresponding to the fiscal
3year of a municipality imposing a tax under this section and the
4year for which a tax is levied under this section.

5"Vendor." Any person maintaining a place of business in any
6municipality under this section and licensed by the Commonwealth
7to sell liquor or malt and brewed beverages, the sale of which
8is subject to the tax authorized by this section. The term does
9not include an employee who, in the ordinary scope of
10employment, renders services to his employer in exchange for
11wages or salary.

12Section 8. Section 141 of the act, amended July 11, 1996 
13(P.L.645, No.108), is amended to read:

14Section 141. Jurisdiction of court of common pleas.

15(a) Increases in tax rates.--The court of common pleas of
16each county shall have jurisdiction to hear a petition filed by
17a municipality which has adopted a [final] plan pursuant to
18Subchapter C or C.1 of Chapter 2 to increase rates of taxation
19for earned income on residents and nonresidents, real property,
20or both, beyond maximum rates provided by law in accordance with 
21sections 123 and 124. The court may extend annually the
22increased taxing powers of the municipality until the
23termination date of the plan adopted by the municipality
24pursuant to Chapter 2.

25(b) Involuntary compromises of delinquent taxes.--The court
26of common pleas of each county may hear a petition filed by at
27least two taxing authorities having taxing power over the
28properties within a municipality which has adopted a [final]
29plan pursuant to Subchapter C or C.1 of Chapter 2 if the
30petition requests a compromise of delinquent taxes due on a

1property in that municipality. The court may order the property
2to be sold at a sheriff's sale and the proceeds to be divided
3among all authorities which are owed taxes for the property
4sold. If the property is sold at sheriff's sale and if the
5proceeds are insufficient to satisfy tax liens on the property,
6the court shall order a proration of the sale proceeds among the
7taxing authorities which fixed the liens.

8Section 9. The act is amended by adding a chapter to read:

9CHAPTER 1-A

10EARLY INTERVENTION PROGRAM

11SUBCHAPTER A

12PRELIMINARY PROVISIONS

13Section 101-A. Definitions.

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

17"Center." The Governor's Center for Local Government
18Services of the Department of Community and Economic Development
19of the Commonwealth.

20"Keystone Principles." The Keystone Principles and Criteria
21for Growth Investment and Resource Conservation adopted May 31,
222005, by the Economic Development Cabinet to foster and measure
23the effectiveness of sustainable economic development and
24conservation of resources through the investment of Commonwealth
25funds in its municipalities.

26"Program." The Early Intervention Program established by
27this chapter.

28Section 102-A. Program objectives.

29The Early Intervention Program established by this chapter
30provides a municipality with a preemptive step for the purpose

1of seeking guidance and assistance from the Commonwealth to
2develop long-term financial management, administrative, service
3delivery and economic development strategies that the
4municipality can implement to avert a fiscal crisis and provide
5fiscal stability. The specific objectives of the Early
6Intervention Program include the following and are meant to:

7(1) Provide the resources to assist a municipality in
8identifying, prioritizing and addressing the financial
9difficulties confronting it, while ensuring its short-term
10and long-term goals and objectives are adequately taken into
11account.

12(2) Engage in a management review of its operations and
13provide recommendations that will enhance financial
14administration, management and service delivery of a
15municipality.

16(3) Strengthen the ability of a municipality to develop,
17adopt, implement and monitor multiyear financial management
18plans and to incorporate the process into its annual budget
19process.

20(4) Implement a system of multiyear revenue and
21expenditure trend analysis, monitoring and forecasting so
22that a municipality can better anticipate and plan for future
23financial circumstances.

24(5) Promote multimunicipal and regional planning,
25cooperation strategies and cost-sharing opportunities between
26two or more municipalities.

27(6) Support the adoption by a municipality of best
28management practices and efficiency measures to increase the
29financial stability of a municipality.

30(7) Further the integration of sound community and

1economic development strategies to encourage the economic
2growth of the tax base of a municipality over a multiyear
3period.

4SUBCHAPTER B

5ADMINISTRATIVE PROVISIONS

6Section 103-A. Authorization.

7The Early Intervention Program is established to authorize
8the center to provide guidance and assistance through grants to
9a municipality seeking to ensure fiscal stability by developing
10and implementing long-term financial, managerial and economic
11development strategies.

12Section 104-A. Grants.

13(a) General rule.--A grant may be awarded by the center to a
14municipality or two or more municipalities cooperating together
15to ensure fiscal stability through the development and
16implementation of long-term financial, managerial and economic
17development strategies in an amount not exceeding $200,000
18during the first fiscal year that commences on the effective
19date of this section, adjusted for inflation in subsequent years
20by an amount not to exceed an annual cost-of-living adjustment
21calculated by applying the percentage change in the Consumer
22Price Index immediately prior to the date the adjustment is due
23to take effect. To be eligible for a grant for implementation
24funding, a municipality must meet the basic training
25requirements established in guidelines developed by the center.

26(b) Match.--The grant amount is subject to a 50% financial
27match by the municipality to which the grant was provided,
28unless the center determines a match by the municipality of a
29lesser amount not less than 10% is warranted. The center may
30authorize any portion of the municipality's financial match to

1be offset by an in-kind match.

2(c) Eligible activities.--A grant shall be used for the
3following eligible activities:

4(1) The development of multiyear financial management
5plan for a municipality.

6(2) The development of multimunicipal or regional
7intergovernmental cooperation initiatives and cost-sharing
8strategies.

9(3) A study to improve the management and operational
10practices and financial administration procedures of a
11municipality.

12(4) A merger or consolidation feasibility study.

13(5) The implementation of any of the eligible activities
14identified in paragraphs (1) through (4).

15(6) Training and capacity-building activities that meet
16basic requirements established in guidelines developed by the
17center which assist the municipality in the implementation of
18plan recommendations.

19(7) Contracts with professional consultants to develop
20and implement recommendations related to eligible activities.

21Section 105-A. Application.

22A program application must be submitted by the applicant
23municipality on a form prescribed by the department utilizing
24the electronic single application format and include or
25demonstrate all of the following:

26(1) The name and address of the municipality or, in the
27case of a multimunicipal application, the municipalities.

28(2) The name of a contact person.

29(3) The execution of a supporting resolution authorizing
30the submission of the application and committing the

1resources of the municipality or, in the case of a
2multimunicipal application, municipalities.

3(4) The single application shall be signed by the
4authorized officer of the municipality or, in the case of a
5multimunicipal application, municipalities.

6(5) Any other information required by the department.

7Section 106-A. Evaluation criteria.

8The center shall evaluate a program application on the basis
9of municipal financial characteristics and the quality of the
10proposed program, including the extent to which the program is
11estimated to improve the administrative, operational and
12financial management capacity of the applicant municipality.
13The following factors shall be considered in the evaluation:

14(1) The current and projected financial condition of the
15municipality.

16(2) The economic and demographic condition of the
17municipality.

18(3) The proactive measures the municipality has taken to
19manage its finances in a responsible manner, including
20attempts to reduce expenditures, increase revenues, adopt
21sound management practices, establish municipal priorities
22and adhere to generally accepted financial management, budget
23and financial reporting standards.

24(4) The extent to which the municipality has
25demonstrated its willingness and commitment to engage in a
26multimunicipal or regional strategy and has examined whether
27certain municipal services can be provided through a council
28of governments, a county government or other structure.

29(5) The extent to which the municipality has
30demonstrated its willingness and commitment to improve its

1financial and administrative operation through the adoption
2and implementation of a multiyear financial management plan.

3(6) Where it has received assistance and funding from
4the department, past performance by the municipality.

5(7) Where applicable, the elements of the Keystone
6Principles shall be included as part of the evaluation
7criteria.

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

9Section 107-A. Award.

10The secretary shall announce by letter applications selected
11for funding. The contact person specified in the application
12shall be sent the offer letter. All funding decisions shall be
13made subject to the availability of funds.

14Section 108-A. Guidelines.

15The department shall establish guidelines consistent with
16this chapter, particularly the program requirements and
17measurements to ensure a municipality is provided with adequate
18guidance. The program shall include a requirement of a financial
19audit of the municipality, prepared by an independent accountant
20or firm, for the fiscal year immediately preceding the
21application for funds under this chapter. The department may
22establish guidelines for the audit, and the requirement may be
23satisfied by any previous audit prepared in accordance with the
24guidelines.

25Section 10. Section 203(c) of the act, amended June 30, 1992
26(P.L.336, No.69), is amended to read:

27Section 203. Procedure for determination.

28* * *

29(c) Investigation.--After receiving the request but before
30the public hearing, the secretary may make an investigation into

1the financial affairs of the municipality. The results of the
2investigation or any study previously conducted by the
3department under Chapter 1-A or section 121 shall be placed in
4the record of the public hearing.

5* * *

6Section 11. Sections 221(d) and (e), 222 and 223 of the act
7are amended to read:

8Section 221. Designation.

9* * *

10(d) Duties.--The coordinator shall [prepare and administer a
11plan designed to relieve the financial distress of the
12municipality which he has been appointed to serve.]:

13(1) Present, at a public meeting within 45 days of the
14execution of the contract between the department and the
15coordinator, a list of the coordinator's preliminary
16findings, as to the financial condition of municipality. The
17list of findings shall include, but is not limited to, a
18quantification of all operating deficits for the current
19fiscal year and a projection of revenues and operating
20expenses for the next three fiscal years, all outstanding
21debt obligations, the cost and term of all outstanding
22contracts, and other relevant information.

23(2) Solicit, not later than the date of the
24coordinator's presentation described in paragraph (1),
25comments relating to the issues associated with the
26municipality's distress from such persons and entities who:

27(i) have participated in the early intervention
28process;

29(ii) have provided consultation on behalf of the
30municipality relating to the issues associated with its

1distress; or

2(iii) are elected officials or employees of the
3municipality or labor organizations representing
4employees of the municipality.

5(3) Consider all comments submitted within 30 days of
6the coordinator's presentation described in paragraph (1)
7before preparing and administering a plan designed to relieve
8the financial distress of the municipality which the
9coordinator has been appointed to serve.

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

11(1) Apply for grants and loans pursuant to Chapter 3, as
12[he] the coordinator deems necessary.

13(2) Investigate the tax-exempt status of any property
14within a distressed municipality and advise the governing
15body of the municipality to appeal the assessment or exempt
16status of property within the distressed municipality.

17(3) Solicit and negotiate payments in lieu of taxes from
18institutions of public charity and other tax-exempt property
19owners in the municipality.

20Section 222. Access to information.

21(a) General rule.--The coordinator shall have full access to
22all municipal records.

23(b) Enforcement where records in possession of official or 
24public employee.--If the coordinator believes that an official
25or employee of the municipality or an authority is not answering
26questions accurately or completely or is not furnishing
27information requested, the coordinator may notify the official
28or employee in writing to furnish answers to questions or to
29furnish documents or records, or both. If the official or
30employee refuses, the coordinator may seek a subpoena in the

1court of common pleas to compel testimony and furnish records
2and documents. An action in mandamus shall lie to enforce the
3provisions of this section.

4(c) Enforcement where records in possession of other
5persons.--If the coordinator believes that a person is not
6furnishing information related to municipal records and that
7person is not subject to subsection (b), the coordinator may
8seek a subpoena in the court of common pleas to compel testimony
9and furnish records and documents.

10Section 223. Public and private meetings.

11(a) Public meetings authorized.--The coordinator may hold
12public meetings as defined in [the act of July 3, 1986 (P.L.388, 
13No.84), known as the Sunshine Act] 65 Pa.C.S. Ch. 7 (relating to 
14open meetings), in connection with plan preparation.

15(b) Private meetings authorized.--Notwithstanding the
16provisions of [the Sunshine Act] 65 Pa.C.S. Ch. 7, private
17negotiation sessions may be conducted by the coordinator between
18the municipality and the individual creditors in an effort to
19obtain the consent of each creditor to the proposed adjustment
20and handling of specific claims against the municipality.

21Section 12. Section 241 of the act, amended or added June
2230, 1992 (P.L.336, No. 69) and July 5, 2012 (P.L.1104, No.133)
23and repealed in part October 13, 1994 (P.L.596, No.90), is
24amended to read:

25Section 241. Contents.

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

30(1) Projections of revenues and expenditures for the

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

5(i) Projected revenues, including:

6(A) Local taxes.

7(B) Licenses, permits and fines.

8(C) Sales and rentals.

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

10(E) Any other sources of projected revenue.

11(ii) Projected expenditures, including:

12(A) Debt service.

13(B) Workforce.

14(C) Elected and executive officials.

15(D) Financial management.

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

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

20(G) Other professional services.

21(H) Public safety.

22(I) Community and economic development.

23(J) Any other applicable expenditures.

24(2) Recommendations which will:

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

27(ii) Eliminate deficits and deficit funds.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

1(12) An analysis of current revenue sources and
2recommendation to modify revenue sources, including the
3subjects and rates of taxation of the distressed municipality
4in accordance with sections 123 and 124. Recommendations
5relating to a modification of revenue sources shall be made
6with consideration to the effect on economic development,
7employment and an equitable distribution of tax burden. The
8analysis and recommendations shall be presented to the court
9in any proceeding under sections 123 and 124. The analysis
10shall address:

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

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

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

20(iv) Revenue as defined in section 103.

21Section 13. Section 242(a) of the act, amended December 19,
221988 (P.L.1272, No.157), is amended and the section is amended
23by adding a subsection to read:

24Section 242. Publication.

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

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

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

3(2) The secretary.

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

5(4) The mayor.

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

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

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

10* * *

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

16* * *

17Section 13.1. Section 245 of the act, amended December 19,
181988 (P.L.1272, No.157), is amended to read:

19Section 245. Adoption by municipality.

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

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

1Section 246. Preparation and action on alternate plan.

2* * *

3(d) Review by secretary.--

4* * *

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

9(i) The secretary's determination.

10(ii) The reasons for the determination.

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

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

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

17Section 247. Plan implementation.

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

21* * *

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

24* * *

25Section 16. Sections 248 and 250 of the act are amended to
26read:

27Section 248. Failure to adopt or implement plan.

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

1request a determination of a fiscal emergency in accordance with 
2Chapter 6.

3Section 250. Debt provisions.

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

13Section 17. Section 252(a) of the act, amended July 5, 2012
14(P.L.1104, No.133), is amended to read:

15Section 252. Plan not affected by certain collective bargaining
16agreements or settlements.

17(a) General rule.--Except as provided in subsection (b), a
18collective bargaining agreement or arbitration settlement
19executed after the adoption of a plan under this subchapter or 
20Subchapter C.1 shall not in any manner violate, expand or
21diminish its provisions.

22* * *

23Section 18. Section 253 of the act is amended by adding a
24subsection to read:

25Section 253. Termination of status.

26* * *

27(d) Duration of distressed status.--Notwithstanding the
28provisions of this section, the duration of distressed status
29shall be limited as set forth in Subchapter C.1.

30Section 19. The act is amended by adding a subchapter to

1read:

2SUBCHAPTER C.1

3DURATION OF DISTRESSED STATUS

4Section 254. Five-year limitation.

5(a) Termination date.--

6(1) Except as otherwise provided in this subchapter, no
7municipality shall be subject to the provisions of this act
8after five years from the effective date of an ordinance
9enacted in accordance with section 245 or 246. No amendment
10to a plan shall affect the termination date as determined
11from the date of enactment of the original ordinance.

12(2) Nothing in this section shall be construed to:

13(i) prohibit a municipality from participating in an
14early intervention program as provided in Chapter 1-A or
15reentering distressed status in accordance with this act
16after a termination of status in accordance with this
17subchapter.

18(ii) Prohibit termination of status proceedings in
19accordance with section 253 prior to the termination date
20as provided in this section.

21(b) Distressed municipalities.--

22(1) Municipalities operating pursuant to a recovery plan
23on the effective date of this section shall be subject to a
24termination date five years from the effective date of the
25most recent recovery plan or amendment enacted in accordance
26with this act, provided, however, that municipalities subject
27to a plan that will remain in effect for one year or less on
28the effective date of this subsection shall be subject to a
29termination date three years from the termination date of the
30current plan or plan amendment.

1(2) If its distressed status has not been rescinded, a
2municipality operating under Chapter 7 shall be subject to a
3termination date five years from the termination date of
4receivership.

5Section 255. Coordinator's report.

6(a) General rule.--In the final year of distressed status as
7determined in accordance with section 254(a) and (b), the
8coordinator shall prepare a report stating the financial
9condition of the municipality and include one of the following
10findings:

11(1) Conditions within the municipality warrant a
12termination in status in accordance with section 253.

13(2) Conditions are such that the municipality should be
14disincorporated in accordance with Chapter 4.

15(3) Conditions as specified in section 261 exist and the
16governing body should initiate proceedings for Federal debt
17readjustment under Subchapter D.

18(4) The elected and appointed officials of the
19municipality have demonstrated a failure to adequately
20implement recovery measures and a receiver should be
21appointed in accordance with Chapter 7. For purposes of this
22paragraph, a failure to adequately implement recovery
23measures shall be considered a fiscal emergency.

24(5) A three-year exit plan in accordance with section
25256 is warranted.

26(b) Filing and notice.--

27(1) The report shall be filed with the same parties as
28provided in section 242(a). The date of filing shall be the
29date on which the municipal clerk or municipal secretary
30places a true and correct copy of the report on file for

1public inspection in the municipal office.

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

10(i) A statement that a report regarding the status
11of the municipality's financial distress was filed
12pursuant to this act.

13(ii) The date and place of filing.

14(iii) A statement that the public has 15 days from
15the date of filing in which to file written comments on
16the report.

17(iv) The name and address of the coordinator to whom
18written comments should be sent.

19(v) A summary of the report and findings of the
20coordinator.

21(vi) The date and place of a public meeting to
22receive comments on the report.

23(c) Written comments.--Written comments on the report may be
24filed with the coordinator. Written comments shall be made no
25later than 15 days after the date of filing. Written comments
26judged by the coordinator to have value to the plan may be used
27to develop a revised report.

28(d) Public meeting.--A meeting conducted by the coordinator
29in the municipality shall be set for a date not later than 20
30days after the date of filing the report. The coordinator shall

1request in writing that the chief executive officer, each member
2of the municipal governing body and the chief financial officer
3of the municipality be present at the coordinator's meeting.
4Comments on the plan shall be received by the coordinator at
5that time. The coordinator has the discretion whether to
6consider comments made on the report.

7(e) Revision of report.--

8(1) Nothing in this section shall be construed to
9preclude the coordinator from revising a report of his own
10initiative.

11(2) Neither the secretary nor the chief executive
12officer or the governing body, as appropriate, may revise the
13coordinator's report.

14(3) If the coordinator decides to revise the report, the
15coordinator shall consult with the secretary and either the
16chief executive officer or the governing body throughout the
17revision of the report and shall give consideration to
18comments they may propose.

19(4) A revised report shall be completed and delivered to
20each party cited in section 242(a) within ten days from the
21date of the coordinator's public meeting on the original
22report.

23Section 256. Exit plan.

24(a) General rule.--If recommended in a final report under
25section 255, the coordinator shall within 90 days of the public
26meeting referred to in section 255 prepare an exit plan for the
27municipality. The exit plan shall be subject to the same filing,
28notice, public meeting and revision procedures as specified in
29section 255.

30(b) Contents of exit plan.--The exit plan prepared by the

1coordinator shall contain such elements as may be necessary to
2ensure termination of distressed status after three years,
3including, but not limited to:

4(1) The sale, lease, conveyance, assignment or other use
5or disposition of the assets of the distressed municipality.

6(2) Functional consolidation of or privatization of
7existing municipal services.

8(3) The execution, approval, modification, rejection,
9renegotiation or termination of contracts or agreements of
10the distressed municipality, provided, however, that the
11provisions of section 252 shall apply to any exit plan
12adopted in accordance with this subchapter.

13(4) Changes in the form of municipal government or the
14configuration of elected or appointed municipal officials and
15employees as permitted by law.

16(c) Adoption of plan.--

17(1) Not later than 45 days following the coordinator's
18public meeting, the municipal governing body shall enact an
19ordinance approving the implementation of the plan, including
20enactment of necessary related ordinances and revisions to
21ordinances.

22(2) If the ordinance takes effect in a municipality
23operating under an optional plan form of government or a home
24rule charter, the chief executive officer shall issue an
25order directing the implementation of the plan no later than
26seven days from the enactment of the ordinance by the
27governing body.

28(3) If the governing body fails to adopt and implement
29the plan, the secretary shall, upon a written determination
30by the coordinator, request that the Governor declare a

1fiscal emergency and initiate proceedings under Chapter 7.

2Section 257. Postreport procedures.

3(a) Five-year procedures.--The secretary shall, upon written
4recommendation from the coordinator and after filing a final
5report under section 255, take one of the following actions:

6(1) Terminate the distressed status of the municipality
7effective 90 days after filing a final report containing a
8finding as provided in section 255(a)(1).

9(2) After filing a final report containing a
10recommendation under section 255(a)(2), terminate the
11distressed status of the municipality effective on the date
12of a final order establishing an unincorporated district
13under Chapter 4.

14(3) After filing a final report containing a
15recommendation under section 255(a)(3), authorize an
16application of the governing body to proceed with a municipal
17debt adjustment action under Subchapter D. The distressed
18status of the municipality shall not be rescinded during the
19term of the municipal debt adjustment plan.

20(4) After filing a final report containing a
21recommendation under section 255(a)(4), petition the Governor
22to declare a fiscal emergency and initiate proceedings under
23Chapter 7.

24(b) Exit plan procedures.--The secretary may, after the
25adoption of a plan under section 256(c) and upon written
26recommendation of the coordinator:

27(1) issue a determination in accordance with section
28253; or

29(2) petition the Governor to initiate proceedings under
30Chapter 7.

1(c) Postexit plan procedures.--If three years have elapsed
2since the adoption of an exit plan without a recommendation as
3provided in subsection (b), the secretary shall, upon a written
4recommendation of the coordinator:

5(1) authorize an application of the governing body to
6proceed with a municipal debt adjustment action under
7Subchapter D. Notwithstanding any other provision of this
8act, the distressed status of the municipality shall not be
9rescinded during the term of the municipal debt adjustment
10plan; or

11(2) terminate the distressed status of the municipality
12effective on the date of a final order establishing an
13unincorporated district under Chapter 4.

14Section 20. Section 261(a)(4) of the act, amended July 5, 
152012 (P.L.1104, No.133), is amended to read:

16Section 261. Filing municipal debt adjustment under Federal
17law.

18(a) Authorization.--In the event one of the following
19conditions is present, a municipality is hereby authorized to 
20apply to the department to file a municipal debt adjustment
21action pursuant to the Bankruptcy Code (11 U.S.C. § 101 et
22seq.):

23* * *

24[(4) A majority of the current or immediately preceding
25governing body of a municipality determined to be financially
26distressed has failed to adopt a plan or to carry out the
27recommendations of the coordinator pursuant to this act.]

28* * *

29Section 21. Section 281 of the act, amended or added June
3030, 1992 (P.L.336, No.69), is amended to read:

1Section 281. Eligibility.

2If a municipality has been determined to be distressed under
3section 203(f) and is not subject to funding restrictions under
4section 251 or 264, it shall be eligible for economic and
5community development assistance as provided in section 282.
6Merger or consolidation [under Chapter 4] of a distressed
7municipality with a municipality may not be deemed to diminish
8the successor municipality's eligibility or priority status for
9economic assistance under this chapter.

10Section 22. Section 282(b) of the act, added June 30, 1992
11(P.L.336, No.69), is amended and the section is amended by
12adding a subsection to read:

13Section 282. Priority.

14* * *

15(b) Releases of funds.--Funds granted to a distressed
16municipality shall only be released upon concurrence by the
17coordinator or receiver that the program to be funded is
18consistent with efforts to alleviate the financially distressed
19status of the municipality as provided in this act.

20(b.1) Release of funds to unincorporated district.--Funds
21granted to an unincorporated district shall be released to the
22administrator in accordance with section 441.

23* * *

24Section 23. Chapter 4 heading of the act is amended to read:

25CHAPTER 4

26[CONSOLIDATION OR MERGER OF] COLLECTIVE

27BARGAINING IN MERGED OR CONSOLIDATED

28MUNICIPALITIES AND ECONOMICALLY NONVIABLE

29MUNICIPALITIES

30Section 24. Chapter 4 of the act is amended by adding a

1subchapter to read:

2SUBCHAPTER C

3DISINCORPORATION OF NONVIABLE MUNICIPALITIES

4Section 431. Definitions

5The following words and phrases when used in this subchapter
6shall have the meanings given to them in this section unless the
7context clearly indicates otherwise:

8"Administrator." A service district administrator appointed
9pursuant to section 434.

10"District." An unincorporated service district created by
11section 441.

12"District advisory committee." A service district advisory
13committee established by section 442.

14"Governing standards." Provisions within an essential
15service plan providing for certain conduct of residents and
16property owners as provided by section 436(c).

17"Municipality." A county, city, borough, incorporated town,
18township and home rule municipality. The term does not include a
19city of the first class.

20"Restricted Account." An account established in the State
21Treasury as provided by section 445.1.

22Section 431.1. Determination of nonviability.

23(a) General rule.--Upon recommendation of a coordinator
24appointed under Chapter 2 or a receiver appointed under Chapter
257, the secretary shall consider whether all of the following
26conditions have been met in determining that a municipality is
27nonviable:

28(1) The municipality is unable to function as a general
29purpose unit of government to provide essential services to
30its residents and property owners.

1(2) The municipality has experienced such deteriorated
2economic conditions and a collapse of its tax base that all
3reasonable efforts to restore economic viability have failed.

4(3) Efforts to merge or consolidate the municipality
5with a neighboring municipality are unachievable or will not
6result in viability.

7(b) Notice and recommendation.--If the secretary determines
8that a municipality is nonviable under all of the conditions
9provided in subsection (a), the secretary shall provide notice
10to the governing body of the municipality of the secretary's
11determination and recommend that the municipality be
12disincorporated under this subchapter.

13Section 432. Procedure for disincorporation.

14(a) Ordinance.--Within 45 days of a determination of
15nonviability under section 431.1, the governing body may enact
16an ordinance, subject to review by the court of common pleas
17under section 433, that will initiate the disincorporation of
18the municipality. The ordinance shall be advertised as required
19by law but it may not become effective until the court has
20issued its decree under section 433.

21(b) Petition by electors.--If the governing body of the
22municipality fails to pass an ordinance authorized under
23subsection (a), then a petition signed by registered electors of
24the municipality comprising at least 51% of the number of
25electors voting for the office of Governor in the last
26gubernatorial general election may be submitted to the court
27within 60 days of the failure of the governing body to enact an
28ordinance as provided in subsection (a).

29(c) Action filed by secretary.--If no ordinance is filed for
30review under subsection (a) and no petition is filed under

1subsection (b) with the court within the time specified, the
2secretary may file an action in the court of common pleas
3petitioning the court to issue a decree under section 433(e).

4Section 433. Judicial review of ordinance or petition.

5(a) Filing and notice.--Upon presentation to the court of
6the filing of an ordinance under section 432(a) or a petition
7under section 432(b) or (c), the court shall direct the
8prothonotary to give notice of the filing of the ordinance or
9petition in a newspaper of general circulation in the county
10where the municipality is located once a week for four
11consecutive weeks and once in the county legal journal, if any,
12during the four-week period. The notice shall provide the date
13the ordinance or petition was filed and specify that exceptions
14to the ordinance or petition may be filed within 45 days of the
15date of the filing of the ordinance or petition by any of the
16following:

17(1) the governing body of the municipality;

18(2) a taxpayer of the municipality;

19(3) any creditor or bondholder of the municipality; or

20(4) any collective bargaining unit or contractor of the
21municipality.

22(b) Notice of hearing.--No later than 60 days after the date
23of the filing of the ordinance or petition, the court shall
24conduct a hearing on the ordinance or petition and exceptions
25filed thereto. Notice of the hearing shall be provided by the
26court to those receiving notice under subsection (a) and to all
27other parties that have filed exceptions in accordance with
28subsection (a).

29(c) Hearing proceedings.--

30(1) The governing body of the municipality and all other

1individuals and entities which have filed exceptions under
2subsection (a) shall be parties to the proceedings and shall
3be entitled to present testimony or other evidence relevant
4to the nonviability of the municipality or relevant to
5exceptions timely filed, provided that the court, in its
6discretion, may consolidate testimony related to similar
7exceptions.

8(2) The coordinator or receiver, or another designee of
9the secretary, shall testify about the progress of the
10municipality under the adopted recovery plan under Chapter 2
11or plan adopted under Chapter 7 and render an opinion
12regarding the viability of the municipality.

13(3) The court may examine pertinent financial
14information and any audits prepared by a certified public
15accountant of the municipality and receive additional
16evidence relevant to the matter, including, but not limited
17to, evidence relating to:

18(i) The effect of disincorporation, including
19provisions for services that would be continued to be
20provided to residents and property owners of the proposed
21disincorporated area.

22(ii) Additional plans, proceedings or strategies
23that could ensure that the municipality remain viable.

24(iii) The effect of the disincorporation on any
25bonds, other obligations or agreements of the
26municipality.

27(d) Costs and fees.--Court costs and filing fees associated
28with proceedings under this subchapter shall be paid by the
29department.

30(e) Judicial decree.--

1(1) The court shall issue a decree approving the
2validity of the ordinance or granting the petition unless it
3finds, by clear and convincing evidence, that the
4municipality should continue to exist as a separate municipal
5corporation because of a reasonable expectation that the
6municipality is viable.

7(2) Upon issuance of the judicial decree, the department
8and governing body of the municipality shall engage in the
9duties required by this subchapter to prepare for
10disincorporation. The disincorporation shall take effect upon
11the execution of disincorporation under section 439.

12(3) Upon the failure of the court to issue a judicial
13decree under this subsection following the hearing, the
14secretary shall determine whether:

15(i) the recovery plan for the municipality shall
16remain in effect, provided that the limitations under
17Subchapter C.1 do not yet apply;

18(ii) the elected and appointed officials of the
19municipality have demonstrated a failure to adequately
20implement recovery measures and, if so, that a receiver
21should be appointed in accordance with Chapter 7. For
22purposes of this subparagraph, a failure to adequately
23implement recovery measures shall be considered a fiscal
24emergency;

25(iii) conditions within the municipality warrant a
26termination in status in accordance with section 253; or

27(iv) conditions as set forth in section 261 exist
28and, if so, that the governing body should initiate
29proceedings for federal debt readjustment under
30Subchapter D of Chapter 2.

1Section 434. Service district administrator.

2(a) Appointment.--No later than 30 days following a decree
3of the court of common pleas under section 433(e), the secretary
4shall appoint a service district administrator. The
5administrator must have a minimum of five years' experience and
6demonstrable expertise in business, financial or State or local
7budgetary matters and be a resident of this Commonwealth for at
8least one year prior to appointment.

9(b) Compensation and expenses.--The administrator's
10compensation and reimbursement for actual and necessary expenses
11shall be paid by the Commonwealth. The date and amount of
12compensation shall be established by the secretary. The
13department may require the compensation and expenses of the
14administrator to be reimbursed by an assessment for
15administrative costs under Subchapter D.

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

29(2) Local emergency management in accordance with the
30plan and program of the Pennsylvania Emergency Management

1Agency. The administrator shall consult with the emergency
2management organization of the county where the district is
3located to develop a plan which serves the district in a
4substantially similar manner as plans required for a
5political subdivision under 35 Pa.C.S. Ch. 75 Subch. A
6(relating to general provisions). The plan shall include a
7procedure for a declaration of a disaster emergency to be
8made in the district and the designation of a local
9coordinator of emergency management. The administrator is
10authorized to negotiate any contracts which are necessary to
11provide for the execution of a plan formed under this
12paragraph.

13(3) Payment of the lawful financial obligations of the
14unincorporated service district, including any transferred
15current obligation of the municipality and service of any
16debt incurred by the municipality in the manner provided by
17Subchapter D, after the disincorporation of the municipality.

18(4) Assessment of fees as provided by Subchapter D.

19(5) Disposition of all municipal property by sale, lease
20or conveyance for any of the following purposes:

21(i) Payment of outstanding debt obligations.

22(ii) Provision of services by an entity contracting
23with the unincorporated service district.

24(iii) Possession of title by the Commonwealth as
25provided by Subchapter D.

26(6) Termination of all contracts with the municipality.

27(7) Administration of the unincorporated service
28district, which may include reimbursement to the department
29for the compensation of the administrator.

30(8) Establishment of the date of disincorporation of the

1municipality as provided for by section 439.

2(9) Establishment of the name of the district. A
3district established by this act shall be named "The
4Unincorporated District of ........................."

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

6(1) Provide for the levy of any taxes.

7(2) Terminate an obligation to repay any debt, except
8that the plan may designate the unincorporated service
9district as the servicer of a debt and may specify that a
10debt secured by the collection of taxes shall be secured by
11the assessment of fees sufficient to satisfy the service
12obligations of the debt.

13(3) Assess and collect a higher amount of fees in the
14district's first full calendar year totaling 5% more than the
15total taxes levied in the municipality's final year before
16disincorporation.

17(4) Authorize the incurrence of any debt by the
18district, except as provided under section 441(k).

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

20(1) The essential services plan shall provide for
21governing standards, which standards shall include:

22(i) Rules and conduct related to the maintenance of
23property, conduct in public places and the parking of
24vehicles in public places which shall protect the health,
25safety and welfare of the residents and property owners
26of the district to the extent such rules and conduct
27could have been adopted by the municipality by ordinance.

28(ii) Fines and other relief which may be granted by
29a court presiding over a civil action brought for a
30violation of the governing standards.

1(2) If the governing body of the municipality adopts
2recommended governing standards as provided in section
3435(c), the administrator shall include the recommended
4governing standards in the essential services plan unless the
5administrator finds that the recommended governing standards
6are unlawful, unconstitutional or would substantially impede
7the administration of the essential services plan.

8Section 437. Proposed essential services plan.

9(a) Filing.--Within 90 days of the appointment of the
10administrator, the administrator shall deliver true and correct
11copies of the proposed essential services plan to:

12(1) The municipal clerk or municipal secretary, who
13shall immediately place the copy on file for public
14inspection in the municipal office.

15(2) The secretary.

16(3) Each member of the municipal governing body.

17(4) The chief executive officer of the municipality.

18(5) The chief financial officer of the municipality.

19(6) The solicitor of the municipal governing body.

20(b) Date of filing.--For purposes of this section, the date
21of filing the proposed essential services plan shall be the date
22on which the municipal clerk or municipal secretary places a
23true and correct copy of the proposed essential services plan on
24file for public inspection in the municipal office.

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

26(1) On the date of filing, notice that a proposed
27essential services plan has been filed and is open for public
28inspection in the municipal office shall be published by the
29administrator in the county legal reporter and in one or more
30newspapers with general circulation serving the area in which

1the municipality is located. The cost for publishing the
2notice shall be borne by the department. The notice shall
3contain the following:

4(i) A statement that a proposed essential services
5plan has been filed regarding the provision of essential
6services to the residents and property owners of the
7unincorporated service district which shall succeed the
8municipality after disincorporation.

9(ii) The date and place of filing.

10(iii) A statement that the public has 15 days from
11the date of filing in which to file written comments
12relating to the proposed essential services plan.

13(iv) The name and address of the administrator to
14whom written comments should be sent.

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

16(2) Notice of an administrator's public meeting on the
17proposed essential services plan shall be published by the
18administrator in the county legal reporter and in one or more
19newspapers with general circulation serving the area in which
20the municipality is located. The department shall bear the
21cost for publishing the notice. The notice shall contain the
22following:

23(i) A statement that the purpose of the
24administrator's public meeting is to receive public
25comments on the proposed essential services plan.

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

27(3) The administrator may combine the publication of the
28notice that a proposed essential services plan has been filed
29with the publication of the notice of the public meeting.

30(d) Comment period.--Written comments on the proposed

1essential services plan may be filed with the administrator.
2Written comments shall be made no later than 15 days after the
3date of filing. Written comments judged by the administrator to
4have value to the proposed essential services plan may be used
5to develop revisions for a final essential services plan.

6(e) Administrator's public meeting.--A meeting conducted by
7the administrator in the municipality shall be set for a date no
8later than 20 days after the date of filing the proposed
9essential services plan. The administrator shall request in
10writing that the chief executive officer, each member of the
11municipal governing body and the chief financial officer of the
12municipality to be present at the service administrator's
13meeting. At that meeting, the administrator shall:

14(1) Present a summary of the proposed essential services
15plan.

16(2) Receive public comment on the proposed essential
17services plan.

18(3) Allow the members of the governing body of the
19municipality to present written and oral comments requesting
20revisions of the proposed essential services plan.

21Section 438. Final essential services plan.

22(a) Amendment of plan.--

23(1) The administrator shall consider all timely
24submitted written comments, comments presented at the public
25meeting and requests for revision in the amendment of the
26publicly presented proposed essential services plan before
27publishing a final essential services plan.

28(2) In the event that the administrator does not
29incorporate the requests for revision by the members of the
30governing body of the municipality regarding the levels of

1services provided under the proposed essential services plan
2or the basis for the calculation of fees assessed under the
3proposed essential services plan, the administrator shall
4state in the proposed essential services plan why the
5requested revisions were not feasible to incorporate in the
6final essential services plan.

7(b) Notice of final essential services plan.--Within 45 days
8of the public meeting the administrator shall file the final
9essential services plan with the persons listed in section
10437(a) and provide notice of the publication of the final
11essential services plan in the manner provided in section
12437(c)(1)(i), (ii) and (v).

13(c) Appeal.--

14(1) Any person aggrieved by the final essential services
15plan may appeal the plan to the court of common pleas within
1630 days of notice of the filing of the final essential
17services plan. For purposes of this section, notice shall
18constitute the date that the person received actual notice of
19the final essential services plan, or the date that notice of
20the filing of the final essential services plan is first
21published in a newspaper with general circulation serving the
22area in which the municipality is located.

23(2) No appeal of a final essential services plan shall
24constitute an automatic stay of the essential services plan.

25(3) The appeal shall be sustained only where the court
26finds that the final essential services plan is unlawful or
27unconstitutional, or the conduct of the administrator is
28arbitrary or capricious.

29Section 439. Disincorporation of municipality.

30(a) Effects of disincorporation.--On the date of

1disincorporation, the following shall occur:

2(1) Notwithstanding any other provision of law, the
3terms of office of all elected officials of the municipality
4shall end and no person shall be elected or appointed to fill
5any vacancy of office.

6(2) All ordinances of the municipality shall be
7nullified.

8(3) All corporate powers granted to the municipality
9under its charter, municipal code or any other provision of
10law shall terminate.

11(4) The municipality shall be deemed by operation of law
12to be disincorporated. The area formerly contained within the
13municipality shall be an unincorporated service district as
14provided under Subchapter D.

15(b) Duties of administrator.--On or before the date of
16disincorporation, the administrator shall:

17(1) Execute all contracts for the provision of services
18and otherwise implement the essential services plan, which
19shall take effect on the date of disincorporation.

20(2) Provide notice of assessments to the property owners
21of the unincorporated service district according to the
22procedure provided in section 443(b) which may be a partial
23year assessment as provided by section 443(e).

24(3) Provide notice to the Governor and all Commonwealth
25agencies that the municipality has been disincorporated and
26the date of disincorporation.

27(c) Duties of county.--Effective on the date of
28disincorporation, notwithstanding any other provision of law,
29the county in which the municipality is located shall:

30(1) Adopt a zoning ordinance which applies to the

1unincorporated service district and adopts the substantive
2provisions of the municipality's zoning ordinance, if any, as
3it was in effect before nullification by subsection (a)(2).

4(2) Adopt an official map for the unincorporated service
5district which adopts the substance of the municipality's
6official map, if any, as it was in effect before
7nullification by subsection (a)(2).

8(3) Unless the county has adopted a subdivision and land
9development ordinance prior to the date of disincorporation
10of the municipality, adopt a subdivision and land development
11ordinance which shall apply to any unincorporated service
12district within the county.

13(4) Provide for the administration of the zoning
14ordinance and the subdivision and land development ordinance
15as they apply to the unincorporated service district and any
16other provisions of the act of July 31, 1968 (P.L.805,
17No.247), known as the Pennsylvania Municipalities Planning
18Code, that may be applicable.

19(5) Amend the county's comprehensive plan to the extent
20necessary to be consistent with the requirements of this
21subsection.

22(d) Property succession.--Immediately following
23disincorporation the area formerly contained within the
24municipality shall, by operation of law, be deemed an
25unincorporated service district under Subchapter D, the
26Commonwealth shall succeed in title to all property, including
27all real property, personal property and moneys in any municipal
28account, of the disincorporated municipality to be held in trust
29for the benefit of the residents and property owners of the
30unincorporated service district as provided under Subchapter D.

1SUBCHAPTER D

2UNINCORPORATED SERVICE DISTRICT

3Section 441. Establishment of unincorporated service district.

4(a) General rule.--The area formerly contained within a
5municipality shall, after disincorporation under Subchapter C,
6become an unincorporated service district. The district shall be
7an entity of the Commonwealth established for the special
8purpose of providing essential services to the citizens living
9within the district until such time as the district is
10incorporated as a municipality or made a part of a merged or
11consolidated with an existing municipality under section 447.

12(b) Authorized administrative authority.--All powers
13providing for the administration of the district shall be vested
14in the department through the administrator as provided in this
15subchapter. The district advisory committee shall not possess
16the corporate powers of the governing body of any municipality
17or any authority, except as provided by this subchapter.

18(c) Corporate powers prohibited.--Nothing in this subchapter
19shall be construed as authorizing the district to exercise
20corporate powers for the administration of a local government,
21including the power to levy taxes, establish elected or
22appointed offices and purchase, sell or convey property, except
23that the residents of the district may incorporate a
24municipality or merge or consolidate with an existing
25municipality as provided for in section 447.

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

27(1) All assets not sold by the municipality during the
28process of its disincorporation shall be conveyed to the
29Commonwealth to be held in trust for the benefit of the
30residents and property owners of the district.

1(2) The administrator shall serve as trustee of the
2property and provide for the repair and maintenance of all
3real property and roadways held in trust for the benefit of
4the residents and property owners of the district through the
5collection of assessments under this subchapter and
6administration of payments distributed to the district as
7provided in subsection (f).

8(3) Nothing in this subsection shall be construed as
9providing the express approval of the General Assembly to
10dispose of or use any lands acquired with funds under the act
11of June 22, 1964 (Sp.Sess., P.L.131, No.8), known as the
12Project 70 Land Acquisition and Borrowing Act, for purposes
13other than those provided by that act, except that the
14Commonwealth may succeed in title of the property for the
15limited purposes established by this subsection.

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

17(1) All debt incurred by the municipality before the
18establishment of the district shall be held by the district
19for administration by the administrator. Any such debt shall
20be secured by the assets conveyed to the Commonwealth and
21held in trust under subsection (d) and serviced by fees
22collected under this subchapter.

23(2) Nothing in this section shall be construed to
24authorize the Commonwealth to guarantee any debt incurred by
25a municipality or district with the full faith and credit of
26the Commonwealth, revenues from the General Fund or any other
27source of revenue not derived from fees assessed for the
28administration of this subchapter or gains from the sale of
29assets of the former municipality.

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

1(1) A district shall be eligible to receive any
2financial grant, loan or payment and participate in any
3program for which it was eligible when it was a municipality,
4including, but not limited to, payments distributed pursuant
5to the act of June 1, 1956 (1955 P.L.1944, No.655), referred
6to as the Liquid Fuels Tax Municipal Allocation Law, all
7programs administered by the Pennsylvania Infrastructure
8Investment Authority and all economic and community
9development programs funded by the Commonwealth.

10(2) A district shall continue to receive priority in all
11economic and community development programs funded by the
12Commonwealth as provided for by Subchapter E of Chapter 2.

13(3) The administrator may apply for and shall manage any
14funds distributed to the district pursuant to this section.

15(g) Credit for fees assessed.--The payment of fees under
16this subchapter by a resident of a district shall constitute a
17credit against the collection of any income tax by a
18municipality on nonresidents, if applicable.

19(h) Relationship with existing municipal and other
20authorities preserved.--

21(1) All authorities established to provide services to
22the residents and property owners of a municipality prior to
23disincorporation shall continue to serve the residents and
24property owners of a district, and all members of the
25authority appointed by the governing body of the municipality
26prior to disincorporation shall continue to serve out the
27remainder of the members' terms.

28(2) Notwithstanding the provisions of 53 Pa.C.S. § 5607
29(relating to purposes and powers) or any other provision of
30law, subsequent appointments to the authority board which

1would otherwise be made by the governing body of the
2municipality shall be made by the administrator in
3consultation with the district advisory committee.

4(i) Governing standards enforceable.--

5(1) The governing standards included in the essential
6services plan shall be enforceable by the filing of a civil
7action by the administrator or any aggrieved property owner
8or resident of the district.

9(2) A violation of the governing standards shall
10constitute a public nuisance.

11(3) A magisterial district court or another court of
12competent jurisdiction presiding over a civil action brought
13under this subsection may find relief for the filing party
14according to the relief provided for in the essential
15services plan or any other relief which is available by law
16for the abatement of a public nuisance.

17(j) Pennsylvania Construction Code applicable.--

18(1) The act of November 10, 1999 (P.L.491, No.45), known
19as the Pennsylvania Construction Code Act, shall apply to all
20construction, alteration, repair and occupancy of all
21buildings within the district as though the district were a
22municipality which opted not to adopt the uniform
23construction code by ordinance.

24(2) The administrator shall receive any application for
25a construction permit and provide appropriate notices to an
26applicant of a construction permit and the Department of
27Labor and Industry as provided under section 501(e) of the
28Pennsylvania Construction Code Act.

29(k) Incurrence of debt limited.--The district shall not
30incur debts not provided for in subsection (e), except that the

1administrator may utilize such mechanisms as are necessary to
2incur temporary debts, or make purchases on credit, on behalf of
3and for the limited purpose of managing the cash flow for the
4district. All obligations incurred under this subsection shall
5be satisfied in full within one year and secured only by the
6anticipation of the collection of assessments under section 443.

7Section 442. Service district advisory committee.

8(a) Establishment.--Each service district shall establish a
9service district advisory committee.

10(b) Composition.--The district advisory committee shall be
11composed of three persons who are at least 18 years of age,
12including two resident property owners of the district and one
13owner of a business within the district, if any, who may or may
14not be a resident of the district.

15(c) Appointment by governing body.--At least 30 days prior
16to the date of disincorporation, the governing body of the
17former municipality shall appoint three members of the district
18advisory committee. The governing body shall designate that one
19appointee serve a term of one year, one appointee serve a term
20of two years and one appointee serve a term of three years.

21(d) Vacancy.--At the expiration of the term of a member of
22the district advisory committee, the remaining members of the
23committee shall appoint a person to fill the vacancy. In the
24event that the remaining members of the committee are unable to
25agree on a person to fill the vacancy or there is more than one
26vacancy, the administrator shall select a person or persons to
27fill the vacancy. All persons appointed to fill a vacancy on the
28district advisory committee shall have a term of three years
29beginning on the date of appointment.

30(e) Advise administrator.--The district advisory committee

1shall, at least once every three months, meet with the
2administrator and may make recommendations to the administrator
3for revisions to the essential services plan, including
4revisions to the levels of services provided to the residents
5and property owners of the district and methodology of rate
6calculation. The administrator shall consider all
7recommendations of the district advisory committee.

8(f) Advise county on land use issues.--The district advisory
9committee may provide recommendations on behalf of the residents
10and property owners of the district to any county official
11regarding any land use-related matter.

12(g) Advise department on incorporation.--The district
13advisory committee may provide recommendations to the department
14at any time that the residents of the district and the
15department consider the feasibility of incorporating as a viable
16municipality or merger or consolidation with an existing
17municipality.

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

19(1) Amendments to the governing standards may be
20recommended by a majority vote of the district advisory
21committee or by a petition signed by registered electors of
22the municipality comprising at least 10% of the number of
23electors voting for the office of Governor in the last
24gubernatorial general election.

25(2) Upon receipt of a recommendation made under this
26subsection, the administrator shall include the recommended
27amendments to the governing standard as a proposed plan
28amendment under section 444, unless the administrator finds
29that the recommended amendment of the governing standards is
30unlawful, unconstitutional or would substantially impede the

1administration of the essential services plan.

2(i) Restrictions.--The district advisory committee shall
3have no authority to act as a municipal governing body.

4(j) Open meetings.--The district advisory committee shall be
5an agency for purposes of the open meeting provisions of 65
6Pa.C.S. Ch.7 (relating to open meetings).

7Section 443. Assessments.

8(a) Authority to assess.--The administrator may establish
9assessments on a front foot or benefit-conferred basis, or a
10combination of both, on all real property within the district to
11provide for:

12(1) The cost of all essential services provided to the
13district.

14(2) The service of all debts held in trust by the
15Commonwealth which were incurred by the former municipality
16prior to disincorporation.

17(3) The necessary construction, maintenance or repair of
18facilities or properties which have been conveyed to the
19Commonwealth and are held in trust for the benefit of the
20district.

21(4) Reimbursement to the department of its reasonable costs
22of administration of the district, including, but not limited
23to, the compensation of the administrator and the collection of
24assessments authorized under this section.

25(5) Other costs incurred by the district or administrator in
26the execution of this subchapter, including a reserve of no more
27than 15% of the annual estimated costs of the essential services
28plan in the restricted account established in section 445 to
29provide for the provision of unforeseeable costs.

30(b) Establishment of assessment.--

1(1) No later than October 1 of the year preceding the
2year for which the assessment applies, the administrator
3shall establish a schedule of assessment for all real
4property within the unincorporated district.

5(2) The administrator shall provide written personal
6notice to each property owner of each property of the
7assessment due for the ensuing year no later than November 1
8of the year preceding the year for which the assessment
9applies.

10(3) As used in this subsection, "personal notice" shall
11mean and include notice upon the owner of a property either
12by personal service upon the owner or by certified mail to
13the owner at the owner's last known address or where service,
14after a reasonable attempt, shall not have been successfully
15made by either of these two methods, then by leaving notice
16at or upon the property.

17(c) Appeal of assessment.--Any person wishing to challenge
18the reasonableness of the assessment may file a suit in the
19court of common pleas within 30 days of receiving the notice
20provided in subsection (b).

21(d) Payment of assessments.--Payment of the assessment in
22full shall be due no later than March 1, unless the
23administrator has provided for installment payments in
24accordance with subsection (e).

25(e) Installments.--The administrator may provide for the
26payment of assessments by equal installments on a quarterly or
27semiannual basis as follows:

28(1) The administrator shall provide written personal
29notice of the installment plan to owners containing the date
30installments are due, interest and prepayment.

1(2) The rate of interest for the installments shall be
2established by the administrator at a rate of 6% per year.

3(3) If any of the installments remain unpaid for 60 days
4after the same has become due and payable, the entire unpaid
5assessment, plus unpaid accrued interest and any costs, shall
6be due and payable and the administrator shall proceed to
7collect the assessment due as provided in subsection (g).

8(4) A property owner upon whom an assessment has been
9made may pay all or as many of the installments before the
10same are due, with interest and costs to the due date of the
11next installment.

12(f) First year assessment.--The administrator may provide
13for a partial assessment for the calendar year in which the
14disincorporation of the municipality occurs. The due date for a
15partial year assessment and installment schedule may be set by
16the administrator, provided that no assessment shall be due
17sooner than 60 days after the administrator provides written
18personal notice of the assessment under the procedure in
19subsection (a).

20(g) Delinquent assessments.--Assessments remaining unpaid on
21December 31 of the year in which they are due shall be
22delinquent and subject to interest at a rate of 10% per year
23from the date of filing as a lien in accordance with the act of
24May 16, 1923 (P.L.207, No.153), referred to as the Municipal
25Claim and Tax Lien Law.

26(h) Liens.--An assessment, together with all charges,
27expenses and fees, including reasonable attorney fees necessary
28for its collection, shall be a lien upon the real property
29benefited. The lien shall have the same priority and may be
30collected in the same manner as a municipal lien in accordance

1with the Municipal Claim and Tax Lien Law or through a civil
2action initiated by the administrator.

3(i) Limited assessment of public property.--An assessment
4under this section on property held by the Federal Government,
5the Commonwealth and any other public property shall be limited
6to an assessment for those services which are directly consumed
7by the property, including, but not limited to, water service,
8sewer service and waste collection.

9Section 444. Amendment of essential services plan.

10(a) Periodic review.--No less than once per year, the
11administrator shall meet with the district advisory committee to
12consider the adequacy of the essential services plan and
13consider any request for revision of the essential services plan
14made by the district advisory committee.

15(b) Filing of amendment.--The administrator may file a
16proposed essential services plan amendment with the secretary
17and each member of the district advisory committee at any time.
18The district advisory committee may request a public meeting to
19consider the amendment within five days of the filing of a
20proposed essential services plan amendment.

21(c) Notice of amendment.--No later than the date that the
22administrator files the proposed essential services plan
23amendment, the administrator shall provide notice to the public
24of the amended essential services plan using the procedure
25provided for by section 437(c)(1). If the district advisory
26committee requests a public hearing, the administrator shall
27schedule a public meeting within 30 days of the date that the
28proposed essential services plan amendment was filed and provide
29notice of the public meeting using the procedure provided for by
30section 437(c)(2).

1(d) Comment period.--Written comments on the proposed
2essential services plan amendment may be filed with the
3administrator. Written comments must be made no later than 15
4days after the date of filing. Written comments judged by the
5administrator to have value to the essential services plan may
6be used to develop revisions for a final essential services plan
7amendment.

8(e) Administrator's public meeting.--If a public meeting is
9scheduled at the request of the district advisory committee, the
10administrator shall request in writing that the members of the
11district advisory committee be present at the administrator's
12meeting. At that meeting, the administrator shall:

13(1) Present a summary of the proposed essential services
14plan amendment.

15(2) Receive public comment on the proposed essential
16services plan amendment.

17(3) Allow the members of the district advisory committee
18to present written and oral comments requesting revisions of
19the proposed essential services plan amendment.

20(f) Final essential services plan amendment.--The
21administrator shall consider all timely submitted written
22comments, comments presented at the public meeting and requests
23for revision in the amendment of the publicly presented proposed
24essential services plan before filing a final essential services
25plan amendment. In the event that the administrator does not
26incorporate the requests for revision by the district advisory
27committee regarding the levels of services provided under the
28essential services plan or the basis for the calculation of fees
29assessed under the essential services plan, the administrator
30shall state in the essential services plan amendment why the

1requested revisions were not feasible to incorporate in the
2final essential services plan.

3(g) Emergency essential services plan amendment.--
4Notwithstanding the requirements provided by this section for
5the adoption of a final essential services plan amendment, where
6the secretary finds that there is or will be an imminent threat
7to public safety, human health or the environment, the secretary
8may provide a waiver to the administrator allowing the
9administrator to immediately publish an emergency essential
10services plan amendment. An emergency essential services plan
11amendment shall take effect immediately.

12(h) Notice of final essential services plan amendment.--The
13administrator shall provide notice of the publication of the
14final essential services plan amendment or emergency essential
15services plan amendment in the manner provided in section 437(c)
16(1)(i), (ii) and (v). Upon providing notice as required by this
17chapter, the administrator may execute any contract necessary to
18administer the essential services plan, as amended.

19(i) Appeal.--

20(1) Any person aggrieved by a final essential services
21plan amendment or emergency essential services plan amendment
22may appeal the final essential services plan amendment to the
23court of common pleas within 30 days of notice of the filing
24of the final essential services plan amendment.

25(2) For purposes of this section, notice shall
26constitute the date that the person received actual notice of
27the final essential services plan amendment, or the date that
28notice of the filing of the final essential services plan
29amendment is first published in a newspaper with general
30circulation serving the area in which the municipality is

1located.

2(3) An appeal of a final essential services plan
3amendment shall be limited to the amended portion of the
4essential services plan.

5(4) No appeal of a final essential services plan
6amendment shall constitute an automatic stay of any portion
7of the essential services plan.

8(5) The appeal shall be sustained only where the court
9finds that the final essential services plan amendment is
10unlawful or unconstitutional, or the conduct of the
11administrator is arbitrary or capricious.

12Section 445. Unincorporated Service District Trust Fund.

13(a) Establishment.--There is hereby established a special
14fund in the State Treasury, separate and apart from all other
15public moneys or funds of the Commonwealth, to be known as the
16Unincorporated Service District Trust Fund. The purpose of this
17fund shall be to hold moneys from unincorporated service
18districts and pay for the expenses and obligations of
19administrators, unincorporated service districts and the
20department pursuant to Subchapter C. The department shall
21allocate funds specific to a district in a restricted account
22pursuant to section 445.1.

23(b) Appropriation.--As much as may be necessary of such
24moneys and interest in the special fund established under
25subsection (a) is hereby appropriated for the purposes
26authorized by this subchapter.

27Section 445.1. Restricted accounts.

28(a) Establishment.--There is established in the
29Unincorporated Service District Trust Fund a restricted account
30for each unincorporated service district. The administrator for

1each district shall deposit all moneys collected by assessments,
2delinquent municipal tax receipts, and proceeds from the sale of
3municipal assets authorized under this subchapter into the
4restricted account not later than 30 days after collection. Any
5interest accrued on the account shall be credited to the account
6for purposes of meeting the requirements of this subchapter. The
7restricted account shall be used to pay for the expenses and
8obligations of the administrator and the unincorporated service
9district. The department may pay for the compensation and
10expenses of the administrator from the restricted account.

11(b) Appropriation.--As much as may be necessary of such
12moneys and interest in the restricted account established under
13subsection (a) is hereby appropriated for the purposes
14authorized by this subchapter.

15Section 446. Audit.

16The Auditor General shall conduct an annual audit of the
17district. The audit shall include a review of the services
18rendered under the essential services plan, the proceeds
19generated by the assessments levied pursuant to section 443 and
20all transactions made by the administrator on behalf of the
21district.

22Section 447. Merger and consolidation; incorporation of
23municipal corporation.

24(a) Merger and consolidation.--

25(1) For the limited purpose of merging or consolidating
26with one or more surrounding municipalities under 53 Pa.C.S.
27Ch. 7 Subch. C (relating to consolidation and merger), the
28residents of the district may file a petition with the county
29board of elections as provided in 53 Pa.C.S. §§ 735 (relating
30to initiative of electors seeking consolidation or merger

1without new home rule charter) and 735.1 (relating to
2initiative of electors seeking consolidation or merger with
3new home rule charter).

4(2) Residents of the district may be nominated to, and
5serve on, a commission formed to study merger or
6consolidation of the district with one or more
7municipalities.

8(3) Upon favorable action by the electorate on
9consolidation or merger, the administrator, in consultation
10with the district advisory committee, may enter into a merger
11or consolidation agreement with the governing bodies of other
12municipalities in accordance with 53 Pa.C.S. § 737 (relating
13to consolidation or merger agreement) and shall provide for
14the transition of the district into a consolidated or merged
15municipality with the same powers and duties as provided by
16law to governing bodies of municipalities.

17(4) The administrator may expend district funds to the
18extent authorized by law for the purpose of merger,
19consolidation or incorporation as provided in subsection (b).

20(b) Incorporation as municipality.--If the secretary
21determines that the district could be incorporated as a viable
22municipality, the residents of the district may establish or
23incorporate the territory of the district as a municipality as
24provided by law.

25(c) Grants permitted.--The department may issue any loan or
26grant authorized under Chapter 3 to a merged, consolidated or
27subsequently incorporated municipality, including the territory
28of the district to provide transitional assistance.

29(d) Assets in trust.--All assets conveyed to the
30Commonwealth to be held in trust, not otherwise transferred

1under the essential services plan or sold to repay the debt of
2the former municipality, shall be conveyed to a merged,
3consolidated or subsequently incorporated municipality,
4including the territory of the district.

5(e) Assumption of debt.--All debt obligations held in trust
6by the Commonwealth on behalf of the former municipality for
7service by a district shall be assumed by a merged, consolidated
8or subsequently incorporated municipality, including the
9territory of the district.

10Section 25. Chapter 5 of the act is repealed:

11[CHAPTER 5

12FUNDING

13Section 501. Appropriation.

14The sum of $5,000,000, appropriated under section 210 of the
15act of July 1, 1986 (P.L.1776, No.5A), known as the General
16Appropriation Act of 1986, shall be used to carry out the
17provisions of this act. The appropriation shall be distributed
18as follows:

19(1) $500,000 shall be used by the department for
20administrative expenses necessary to carry out the provisions
21of this act.

22(2) $4,500,000 shall be used to provide grants and loans
23to municipalities determined to be financially distressed
24pursuant to this act.]

25Section 26. Chapter 6 heading of the act, added October 20,
262011 (P.L.318, No.79), is amended to read:

27CHAPTER 6

28FISCAL EMERGENCIES IN [CITIES OF THE

29THIRD CLASS] MUNICIPALITIES

30Section 27. Sections 601, 602 and 603 of the act, renumbered

1and added October 20, 2011 (P.L.318, No.79), are amended to
2read:

3Section 601. Definitions.

4The following words and phrases when used in this chapter
5shall have the meanings given to them in this section unless the
6context clearly indicates otherwise:

7"Authority." A municipal authority, parking authority or any
8other authority or corporate entity that is directly or
9indirectly controlled by a distressed [city] municipality or to
10which a distressed [city] municipality has power of appointment.
11The term shall not include a joint municipal authority.

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

13"Debt obligations." Any obligation to pay money, including
14amounts owed for payments relating to lease rental debt, debt
15service, bonds, notes, guarantees for bonds or notes, trust
16indentures, contracts or other agreements.

17"Distressed [city] municipality." A [city] municipality
18which has been determined to be financially distressed under
19section 203(f).

20"Fiscal emergency." A determination made by the Governor
21under section 602(b).

22"Insolvent." Unable to meet all financial obligations as
23they become due, including payment of debt obligations.

24"Municipality." A municipality as defined in section 103,
25other than a city of the first class.

26"Vital and necessary services." Basic and fundamental
27municipal services, including any of the following:

28(1) Police and fire services.

29(2) Ambulance and rescue services.

30(3) Water supply and distribution.

1(4) Wastewater services.

2(5) Refuse collection and disposal.

3(6) Snow removal.

4(7) Payroll and pension obligations.

5(8) Fulfillment of payment of debt obligations or any
6other financial obligations.

7Section 602. Declaration of fiscal emergency.

8(a) Fiscal emergency.--The Governor determines a fiscal
9emergency exists if the distressed [city] municipality:

10(1) (i) is insolvent or is projected to be insolvent
11within 180 days or less; or

12(ii) is unable to ensure the continued provision of
13vital and necessary services; and

14(2) (i) has failed to adopt or implement the
15coordinator's plan in accordance with Subchapter C or C.1 
16of Chapter 2; or

17(ii) has failed to adopt or implement an alternative
18plan that the secretary has approved under section 246.

19(b) Governor.--Upon making a determination that a state of
20fiscal emergency exists, the Governor may declare a state of
21fiscal emergency within the distressed [city] municipality.
22Immediately upon making the declaration, the Governor shall:

23(1) Provide written notice of the declaration to the 
24governing body and, if applicable, the chief executive 
25officer of the distressed [city] municipality along with a 
26concise statement of facts supporting the determination.

27(2) Direct the secretary to, within ten days of the
28Governor's declaration, develop an emergency action plan to
29ensure that vital and necessary services are maintained
30within the [city] municipality during the state of fiscal

1emergency.

2(c) Secretary.--In developing the emergency action plan, the
3secretary shall consider the financial plan prepared by the
4coordinator under Subchapter C of Chapter 2 and any other
5available plan or information the secretary deems appropriate
6and may employ financial or legal experts to assist in
7addressing the fiscal emergency. Notwithstanding any law to the
8contrary, the employment of such experts shall not be subject to
9contractual competitive bidding procedures.

10Section 603. Notification by the secretary.

11(a) Notice.--Upon completion of the emergency action plan,
12the secretary shall cause the plan to be posted on the
13department's publicly accessible Internet website and shall
14provide written notice of the emergency action plan by overnight
15delivery service, providing proof of receipt, to all members of
16the governing body and, if applicable, the chief executive
17officer of the distressed [city] municipality.

18(b) Publication.--The secretary shall publish once in a
19newspaper of general circulation notice that the emergency
20action plan has been completed. The notice shall specify the
21publicly accessible Internet address of the department's website
22where the plan is posted.

23Section 28. Sections 604, 605, 606, 607, 608, 609 and 610 of
24the act, added October 20, 2011 (P.L.318, No.79), are amended to
25read:

26Section 604. Powers of the Governor.

27(a) Powers.--During the state of fiscal emergency, the
28Governor may exercise the authority of the elected or appointed
29officials of the distressed [city] municipality or authority as
30necessary to ensure the provision of vital and necessary

1services and may delegate the authority to the secretary or a
2designee of the secretary. The emergency powers of the Governor
3shall include the following:

4(1) The power to collect funds payable to the distressed
5[city] municipality and authority and use those funds to pay
6for vital and necessary services.

7(2) The power to obtain emergency financial aid for the
8distressed [city] municipality and authority under Chapter 3
9to pay for vital and necessary services.

10(3) The power to enter into contracts and agreements on
11behalf of the distressed [city] municipality and authority to
12pay for vital and necessary services.

13(4) The power to modify the emergency action plan as
14necessary to ensure the provision of vital and necessary
15services.

16(5) Any other power of the elected or appointed
17officials of the distressed [city] municipality or authority
18to ensure the provision of vital and necessary services.

19(b) Orders.--The Governor may issue an order to an elected
20or appointed official of the distressed [city] municipality or
21an authority to implement any provision of the emergency action
22plan or refrain from taking any action that would interfere with
23the powers granted to the Governor or the goals of the plan. An
24order issued under this subsection shall be enforceable under
25section 606.

26(c) Authorization prohibited.--Neither this chapter nor the
27emergency action plan shall be interpreted to authorize the
28Governor to:

29(1) Unilaterally levy taxes.

30(2) Unilaterally abrogate, alter or otherwise interfere

1with a lien, charge, covenant or relative priority that is:

2(i) held by a holder of a debt obligation of a
3distressed [city] municipality; and

4(ii) granted by the contract, law, rule or
5regulation governing the debt obligation.

6(3) Unilaterally impair or modify existing bonds, notes,
7municipal securities or other lawful contractual or legal
8obligations of the distressed [city] municipality or
9authority, except as otherwise ordered by a court of
10competent jurisdiction.

11(4) Authorize the use of the proceeds of the sale,
12lease, conveyance, assignment or other use or disposition of
13the assets of the distressed [city] municipality or
14authorities in a manner contrary to section 707.

15(5) Pledge the full faith and credit of the
16Commonwealth.

17Section 605. Elected and appointed officials.

18During a fiscal emergency, the authorities and appointed and
19elected officials of the distressed [city] municipality shall
20continue to carry out the duties of their respective offices,
21except that no decision or action shall conflict with an
22emergency action plan, order or exercise of power by the
23Governor under section 604.

24Section 606. Mandamus.

25The Governor may petition Commonwealth Court to issue a writ
26of mandamus upon any elected or appointed official of the
27distressed [city] municipality or authority to secure compliance
28with an order issued under section 604(b). The court shall grant
29the relief requested within 14 days of the filing of the
30petition if it determines that the order was issued in

1compliance with this chapter.

2Section 607. Consent agreement.

3(a) Negotiations.--Within eight days of the declaration of a
4fiscal emergency, the governing body and, if applicable, the
5chief executive officer of the distressed [city] municipality
6shall convene a special public meeting to negotiate a consent
7agreement. The meeting shall be attended by the secretary or
8secretary's designee. Negotiations among creditors and any of
9the parties in this subsection shall be conducted in accordance
10with section 223(b).

11(b) Contents.--

12(1) The consent agreement shall incorporate a plan
13setting forth measures designed to provide long-term
14financial stability to the distressed [city] municipality
15after the termination of the fiscal emergency.

16(2) The consent agreement shall include all of the
17following:

18(i) Continued provision of vital and necessary
19services.

20(ii) Payment of the lawful financial obligations of 
21the distressed [city] municipality and authority. This 
22subparagraph includes debt obligations, municipal 
23securities, lease rental obligations, legal obligations 
24and consensual modifications of existing obligations, 
25except as otherwise ordered by a court of competent 
26jurisdiction.

27(iii) Timely deposit of required payments to the
28pension fund for the distressed [city] municipality and
29each authority or the fund in which the distressed [city]
30municipality and each authority participates.

1(iv) Legislative and administrative actions to be
2taken by the elected or appointed officials of the
3distressed [city] municipality during the term of the
4consent agreement.

5(3) The consent agreement may include:

6(i) The sale, lease, conveyance, assignment or other
7use or disposition of the assets of the distressed [city]
8municipality or authority.

9(ii) Approval, modification, rejection,
10renegotiation or termination of contracts or agreements
11of the distressed [city] municipality or authorities.

12(iii) Execution of new contracts or agreements.

13(4) The consent agreement may not include any of the
14following:

15(i) Projections of revenue from a tax or tax rate
16not currently authorized by law.

17(ii) Provisions that unilaterally abrogate, alter or
18otherwise interfere with a lien, charge, covenant or
19relative priority, that is:

20(A) held by a holder of a debt obligation of a
21distressed [city] municipality; and

22(B) granted by the contract, law, rule or
23regulation governing the debt obligation.

24(iii) Provisions that unilaterally impair or modify
25existing bonds, notes, municipal securities or other
26lawful contractual or legal obligations of the distressed
27[city] municipality or authority, except as otherwise
28ordered by a court of competent jurisdiction.

29(iv) Provisions that authorize the use of the
30proceeds of the sale, lease, conveyance, assignment or

1other use or disposition of the assets of the distressed
2[city] municipality or authorities in a manner contrary
3to section 707.

4(v) Any increase in the rate of an earned income tax
5imposed on nonresident workers.

6(c) Ordinance.--Notwithstanding any law to the contrary, the
7following shall apply:

8(1) Upon approval by a majority vote of the governing
9body of the distressed [city] municipality, the consent
10agreement shall be presented to the secretary within 20 days
11of the declaration of fiscal emergency.

12(2) The secretary shall approve or disapprove the
13consent agreement within three days.

14(3) If the secretary determines that the consent
15agreement is sufficient to overcome the distressed [city's]
16municipality's financial distress and approves the agreement,
17the governing body shall enact the consent agreement in the
18form of an ordinance within seven days of approval by the
19secretary.

20(4) The ordinance shall provide that, in the event of a
21breach or unilateral modification of the consent decree by
22the governing body or an elected or appointed official, the
23Governor may institute or reinstitute proceedings under
24Chapter 7.

25(d) Consent to proceedings under Chapter 7.--In addition to
26breach or modification of the consent agreement under subsection
27(c), the following shall be deemed consent to proceedings under
28Chapter 7:

29(1) Failure of the governing body of the distressed
30[city] municipality to convene or the failure of a quorum of

1the governing body to participate in a special public
2meeting required by subsection (a).

3(2) Failure of the governing body or, if applicable, the
4chief executive officer to enact a valid ordinance under
5subsection (c).

6(3) Failure of the distressed [city] municipality to
7comply with the consent agreement or provision of an
8ordinance enacted under subsection (c).

9(4) Enactment by the distressed [city] municipality of
10an amendment to the ordinance enacted in subsection (c) in
11violation of subsection (e).

12(e) Amendment.--The ordinance may be amended upon the
13approval of the secretary.

14(f) Collective bargaining.--A collective bargaining
15agreement or arbitration settlement executed following the
16enactment of an ordinance under this section may not in any
17manner violate, expand or diminish the provisions of the consent
18agreement.

19Section 608. Termination of fiscal emergency and suspension of
20powers.

21(a) Financial emergency.--A fiscal emergency shall end upon
22certification by the secretary that the [city] municipality is
23no longer financially distressed.

24(b) Governor's powers.--The emergency powers of the Governor
25under this chapter shall be suspended upon the enactment and
26continued implementation of an ordinance under section 607 or
27entry of a judicial order appointing a receiver under section
28702.

29Section 609. Restrictions.

30(a) Earned income tax on nonresidents.--A distressed [city]

1municipality subject to this chapter or Chapter 7 may not
2petition a court of common pleas for an increase in the rate of
3an earned income tax imposed on nonresident workers under
4section 123(c) until the secretary terminates the distress
5status of the [city] municipality under section 253.

6(b) Municipal debt adjustment.--A distressed [city]
7municipality subject to this chapter or Chapter 7 may not file a
8municipal debt adjustment action under the Bankruptcy Code (11
9U.S.C. § 101 et seq.) except to the extent authorized under
10Chapter 7.

11Section 610. Applicability.

12(a) Statement.--

13(1) This chapter shall apply only to distressed [cities]
14municipalities.

15(2) Except as set forth in subsection (b), nothing in
16this chapter is intended to limit or otherwise abrogate the
17applicability of any other part of this act.

18(b) Conflict.--If there is a conflict between a provision of
19this chapter and any other provision of this act, the provision
20of this chapter shall prevail.

21Section 29. Chapter 7 heading of the act, added October 20,
222011 (P.L.318, No.79), is amended to read:

23CHAPTER 7

24RECEIVERSHIP IN [CITIES OF THE

25THIRD CLASS] MUNICIPALITIES

26Section 30. Sections 701, 702, 703, 704, 705(g), 706, 707,
27708, 709, 711(a) and (b) and 712(a)(1) of the act, added October
2820, 2011 (P.L.318, No.79), are amended to read:

29Section 701. Definitions.

30The following words and phrases when used in this chapter

1shall have the meanings given to them in this section unless the
2context clearly indicates otherwise:

3"Authority." A municipal authority, parking authority or any
4other authority or corporate entity that is directly or
5indirectly controlled by a distressed [city] municipality or to
6which a distressed [city] municipality has power of appointment.
7The term shall not include a joint municipal authority.

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

9"Debt obligations." Any obligation to pay money, including
10amounts owed for payments relating to lease rental debt, debt
11service, bonds, notes, guarantees for bonds or notes, trust
12indentures, contracts or other agreements.

13"Distressed [city] municipality." A [city] municipality
14which has been determined to be financially distressed under
15section 203(f).

16"Fiscal emergency." A determination made by the Governor
17under section 602(b) or as provided in Subchapter C.1 of Chapter 
182.

19"Insolvent." Unable to meet all financial obligations as
20they become due, including payment of debt obligations.

21"Vital and necessary services." Basic and fundamental
22municipal services, including any of the following:

23(1) Police and fire services.

24(2) Ambulance and rescue services.

25(3) Water supply and distribution.

26(4) Wastewater services.

27(5) Refuse collection and disposal.

28(6) Snow removal.

29(7) Payroll and pension obligations.

30(8) Fulfillment of payment of debt obligations or any

1other financial obligations.

2Section 702. Receivership.

3(a) Receiver.--Following the issuance of a declaration of
4fiscal emergency under section 602(b) or as provided in 
5Subchapter C.1 of Chapter 2, the Governor may direct the
6secretary to file a petition in Commonwealth Court to appoint
7the individual named in the petition as a receiver for the
8distressed [city] municipality. The court shall have no
9authority to appoint anyone other than the individual named in
10the petition as the receiver.

11(b) Service and notice.--

12(1) The secretary shall serve the petition upon:

13(i) the governing body of the distressed [city]
14municipality;

15(ii) the chief executive officer of the distressed
16[city] municipality; and

17(iii) the governing body of each authority.

18(2) The secretary must publish notice of the filing of
19the petition once in a newspaper of general circulation.

20(c) Hearing.--Upon notification of the Governor of the
21failure of the distressed [city] municipality to adopt a valid
22ordinance under section 607 or a notification by the secretary 
23as provided in Subchapter C.1 of Chapter 2, Commonwealth Court
24shall conduct a hearing within 15 days on the petition.

25(d) Determination.--No later than 60 days following the
26filing of a petition under this section, the court shall issue
27an order under subsection (e) if it finds by a preponderance of
28the evidence that all of the following apply:

29(1) Thirty days have passed since the declaration of a
30fiscal emergency.

1(2) There has been a failure by:

2(i) the governing body of the distressed [city]
3municipality to adopt an ordinance under section 607;

4(ii) the governing body of the distressed [city]
5municipality to implement an ordinance under section 607;
6[or]

7(iii) an elected or appointed official of the
8distressed city or authority to strictly comply with an
9order issued by the Governor under section 604[.]; or

10(iv) (Reserved).

11(3) A fiscal emergency under section 602(a) or 
12Subchapter C.1 of Chapter 2 continues to exist.

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

14(1) set forth the findings under subsection (d);

15(2) grant the petition and declare the distressed [city]
16municipality to be in receivership;

17(3) appoint the individual named in the petition to be
18the receiver for a period not to exceed two years, subject to
19extension under section 710(b);

20(4) direct the receiver to develop a recovery plan
21within 30 days under section 703 and submit it to the court,
22the secretary, the governing body and, if applicable, the
23chief executive officer of the distressed [city]
24municipality; and

25(5) require and empower the receiver to implement the
26emergency action plan developed by the secretary under
27section 602 until a recovery plan developed by the receiver
28is approved by the court under section 703.

29(f) Additional actions.--

30(1) The Governor may direct the secretary to file a

1petition in Commonwealth Court to appoint an individual named
2in the petition as a receiver for the distressed [city]
3municipality if the distressed [city] municipality fails to
4comply with or has amended the ordinance without the approval
5of the secretary under section 607(d)(3) or (4).

6(2) The court shall conduct a hearing on the petition
7under paragraph (1) within 15 days of the filing of the
8petition.

9(3) No later than 60 days following the filing of the 
10petition under paragraph (1), the court shall issue an order 
11under subsection (e) if it finds by a preponderance of the 
12evidence that the distressed [city] municipality has failed 
13to comply with section 607(d)(3) or (4).

14Section 703. Recovery plan.

15(a) Issuance.--Within 30 days of the appointment of the
16receiver, the recovery plan required under section 702(e)(4)
17shall be furnished to Commonwealth Court, the secretary and the
18governing body and, if applicable, the chief executive officer
19of the distressed [city] municipality.

20(b) Contents.--The receiver shall consider the plan prepared
21by the coordinator under section 241 and any other existing
22alternate plans in the development of the recovery plan. The
23following shall apply:

24(1) The recovery plan shall provide for all of the
25following:

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

28(ii) Payment of the lawful financial obligations of 
29the distressed [city] municipality and authorities. This 
30subparagraph includes debt obligations, municipal
 

1securities, lease rental obligations, legal obligations 
2and consensual modifications of existing obligations.

3(iii) Timely deposit of required payments to the
4pension fund in which the distressed [city] municipality
5and each authority participates.

6(2) The recovery plan may include:

7(i) the sale, lease, conveyance, assignment or other
8use or disposition of the assets of the distressed [city]
9municipality or authority;

10(ii) the approval, modification, rejection,
11renegotiation or termination of contracts or agreements
12of the distressed [city] municipality or authorities,
13except to the extent prohibited by the Constitutions of
14the United States and Pennsylvania;

15(iii) the execution of new contracts or agreements;
16and

17(iv) other information the receiver deems
18appropriate.

19(c) Restrictions.--The recovery plan may not do any of the
20following:

21(1) Unilaterally levy taxes.

22(2) Unilaterally abrogate, alter or otherwise interfere
23with a lien, charge, covenant or relative priority that is:

24(i) held by a holder of a debt obligation of a
25distressed [city] municipality; and

26(ii) granted by the contract, law, rule or
27regulation governing the debt obligation.

28(3) Unilaterally impair or modify existing bonds, notes,
29municipal securities or other lawful contractual or legal
30obligations of the distressed [city] municipality or

1authority, except as otherwise ordered by a court of
2competent jurisdiction.

3(4) Authorize the use of the proceeds of the sale,
4lease, conveyance, assignment or other use or disposition of
5the assets of the distressed [city] municipality or authority
6in a manner contrary to section 707.

7(d) Confirmation.--Commonwealth Court shall conduct a
8hearing on the recovery plan within 30 days of the receipt of
9the plan from the receiver. The court shall confirm the plan
10within 60 days of the receipt of the plan unless it finds clear
11and convincing evidence that the plan is arbitrary, capricious
12or wholly inadequate to alleviate the fiscal emergency in the
13distressed [city] municipality.

14(e) Modification of plan.--The receiver shall notify the
15Commonwealth Court of any modification to the plan. The court
16may conduct a hearing on the modification within 30 days of its
17receipt. The court shall confirm the modification within 60 days
18of receipt of notification of the modification unless it finds
19clear and convincing evidence that the recovery plan as modified
20is arbitrary, capricious or wholly inadequate to alleviate the
21fiscal emergency in the distressed [city] municipality.

22Section 704. Confirmation.

23(a) Effect of confirmation.--The confirmation of the
24recovery plan and any modification to the receiver's plan under
25section 703 shall have the effect of:

26(1) imposing on the elected and appointed officials of
27the distressed [city] municipality or an authority a
28mandatory duty to undertake the acts set forth in the
29recovery plan;

30(2) suspending the authority of the elected and

1appointed officials of the distressed [city] municipality or
2an authority to exercise power on behalf of the distressed
3[city] municipality or authority pursuant to law, charter,
4ordinance, rule or regulation to the extent that the power
5would interfere with the powers granted to the receiver or
6the goals of the recovery plan; and

7(3) superseding the emergency action plan developed by
8the secretary under section 602.

9(b) Form of government.--Confirmation of the recovery plan
10and any modification to the plan under section 703 shall not be
11construed to:

12(1) change the form of government of the distressed
13[city] municipality or an authority; or

14(2) except as set forth in subsection (a), affect powers
15and duties of elected and appointed officials of the
16distressed [city] municipality or an authority.

17(c) Collective bargaining.--A collective bargaining
18agreement or arbitration settlement executed after confirmation
19of a recovery plan may not, in any manner, violate, expand or
20diminish the provisions of the recovery plan.

21Section 705. Receiver.

22* * *

23(g) Liability.--The receiver shall not be liable personally 
24for any obligations of the distressed [city] municipality or 
25authority. It is declared to be the intent of the General 
26Assembly that the receiver shall enjoy sovereign and official 
27immunity as provided in 1 Pa.C.S. § 2310 (relating to sovereign 
28immunity reaffirmed; specific waiver) and shall remain immune 
29from suit except as provided by and subject to the provisions of 
3042 Pa.C.S. Ch. 85 Subchs. A (relating to general provisions) and
 

1B (relating to actions against Commonwealth parties).

2Section 706. Powers, duties and prohibited actions.

3(a) Powers and duties.--Notwithstanding any other provision
4of law, the receiver shall have the following powers and duties:

5(1) To require the distressed [city] municipality or
6authority to take actions necessary to implement the recovery
7plan under section 703.

8(2) To modify the recovery plan as necessary to achieve
9financial stability of the distressed [city] municipality and
10authorities in accordance with section 703.

11(3) To require the distressed [city] municipality or
12authority to negotiate intergovernmental cooperation
13agreements between the distressed [city] municipality and
14other political subdivisions in order to eliminate and avoid
15deficits, maintain sound budgetary practices and avoid
16interruption of municipal services.

17(4) To submit quarterly reports to the governing body
18and, if applicable, the chief executive officer of the
19distressed [city] municipality and to the department. The
20reports shall be posted on [the] a publicly accessible
21Internet website [for] maintained by the distressed [city]
22municipality.

23(5) To require the distressed [city] municipality or
24authority to cause the sale, lease, conveyance, assignment or
25other use or disposition of the distressed [city's]
26municipality's or authority's assets in accordance with
27section 707.

28(6) To approve, disapprove, modify, reject, terminate or
29renegotiate contracts and agreements with the distressed
30[city] municipality or authority, except to the extent

1prohibited by the Constitutions of the United States and
2Pennsylvania.

3(7) To direct the distressed [city] municipality or
4authority to take any other action to implement the recovery
5plan.

6(8) To attend executive sessions of the governing body
7of the distressed [city] municipality or authority and make
8reports to the public on implementation of the recovery plan.

9(9) [After July 1, 2012, to] To file a municipal debt 
10adjustment action under the Bankruptcy Code (11 U.S.C. § 101 
11et seq.) and to act on the [city's] municipality's behalf in 
12the proceeding. The power under this paragraph shall only be 
13exercised upon the written authorization of the secretary. 
14The filing of a municipal debt adjustment action under this 
15paragraph and any plan of the receiver accepted by the 
16Federal court shall be considered a modification of the 
17recovery plan, except that the modification shall not be 
18subject to judicial review under section 709. A recovery plan 
19submitted to and approved by the Federal court under a 
20Federal municipal debt adjustment action may include Federal 
21remedies not otherwise available under this chapter.

22(10) To meet and consult with the advisory committee
23under section 711.

24(11) To employ financial or legal experts deemed
25necessary to develop and implement the recovery plan.
26Notwithstanding any law to the contrary, the employment of
27such experts shall not be subject to contractual competitive
28bidding procedures.

29(b) Authorization prohibited.--Neither this chapter nor the
30recovery plan shall be interpreted to authorize the receiver to

1do any of the following:

2(1) Unilaterally levy taxes.

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

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

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

9(3) Unilaterally impair or modify existing bonds, notes,
10municipal securities or other lawful contractual or legal
11obligations of the distressed [city] municipality or
12authority, except as otherwise ordered by a court of
13competent jurisdiction.

14(4) Authorize the use of the proceeds of the sale, 
15lease, conveyance, assignment or other use or disposition of 
16the assets of the distressed [city] municipality or authority 
17in a manner contrary to section 707.

18Section 707. Use or disposition of assets.

19(a) Use of proceeds.--The proceeds from any sale, lease,
20conveyance, assignment or other use or disposition of assets of
21the distressed [city] municipality or authority shall be applied
22to the payment of outstanding debt obligations owed by the
23distressed [city] municipality or authority, subject to any
24lien, charge, covenant, restriction, contract, law, rule or
25regulation, that encumbers or is otherwise applicable to the
26assets. Proceeds remaining after payment of outstanding debt
27obligations owed by the distressed [city] municipality or
28authority may be used by the receiver to restructure or provide
29escrow for the payment of future debt obligations or to meet
30operating and capital needs of the distressed [city]

1municipality or authority.

2(b) Prohibitions.--Nothing under this section shall be
3construed to authorize the receiver to unilaterally abrogate,
4alter or otherwise interfere with a lien, charge, covenant or
5relative priority that is:

6(1) held by a holder of a debt obligation of a
7distressed [city] municipality; and

8(2) granted by the contract, law, rule or regulation
9governing the debt obligation.

10Section 708. Elected and appointed officials.

11(a) Orders.--The receiver may issue an order to an elected
12or appointed official of the distressed [city] municipality or
13an authority to:

14(1) implement any provision of the recovery plan; and

15(2) refrain from taking any action that would interfere
16with the powers granted to the receiver or the goals of the
17recovery plan.

18(b) Enforcement.--An order issued under subsection (a) shall
19be enforceable under section 709.

20Section 709. Judicial actions.

21(a) Action by receiver.--The receiver may petition
22Commonwealth Court to issue a writ of mandamus upon any elected
23or appointed official of the distressed [city] municipality or
24authority to secure compliance with an order issued under
25section 708. The court shall grant or deny the relief within 14
26days of the filing of the petition. The court shall grant the
27relief requested if it determines that the order was issued in
28compliance with this chapter.

29(b) Action by elected or appointed officials.--Any elected 
30or appointed official of a distressed [city] municipality or
 

1authority may petition Commonwealth Court to enjoin any action 
2of the receiver that is contrary to this chapter.

3Section 711. Municipal financial recovery advisory committee.

4(a) Establishment.--[There is established a] A municipal
5financial recovery advisory committee is established to meet and
6consult with the receiver in carrying out the duties under this
7chapter. The sole function of the advisory committee shall be to
8provide recommendations and feedback to the receiver on the
9implementation of the recovery plan.

10(b) Composition.--The advisory committee established under
11subsection (a) shall be comprised of the following:

12(1) The chief executive officer, if any, of the
13distressed [city] municipality or a designee.

14(2) The president of the governing body of the
15distressed [city] municipality or a designee.

16(3) One member appointed by the county commissioners of
17the county where the distressed [city] municipality is
18located.

19(4) One member appointed by the Governor.

20* * *

21Section 712. Applicability.

22(a) Statement.--

23(1) This chapter shall apply only to distressed [cities]
24municipalities.

25* * *

26Section 31. The addition of section 122(c) of the act shall
27apply to any and all regulations in effect on the effective date
28of this section.

29Section 32. This act shall take effect in 60 days.