| |
| PRIOR PRINTER'S NOS. 1372, 1407, 1435 | PRINTER'S NO. 1447 |
|
| |
| THE GENERAL ASSEMBLY OF PENNSYLVANIA |
| |
| SENATE BILL |
|
| |
| |
| INTRODUCED BY PICCOLA, PILEGGI, EARLL, VANCE, GORDNER, WAUGH, ALLOWAY, BAKER, ERICKSON, ORIE, BROWNE AND TOMLINSON, JUNE 17, 2011 |
| |
| |
| AS AMENDED ON THIRD CONSIDERATION, JUNE 27, 2011 |
| |
| |
| |
| AN ACT |
| |
1 | Amending the act of July 10, 1987 (P.L.246, No.47), entitled "An |
2 | act empowering the Department of Community Affairs to declare |
3 | certain municipalities as financially distressed; providing |
4 | for the restructuring of debt of financially distressed |
5 | municipalities; limiting the ability of financially |
6 | distressed municipalities to obtain government funding; |
7 | authorizing municipalities to participate in Federal debt |
8 | adjustment actions and bankruptcy actions under certain |
9 | circumstances; and providing for consolidation or merger of |
10 | contiguous municipalities to relieve financial distress," |
11 | further providing for purpose and legislative intent and for |
12 | Commonwealth agency payments or assistance; providing for |
13 | review of coordinator, for the establishment of a management |
14 | board for distressed third class cities and for powers of |
15 | management boards; prohibiting distressed third class cities |
16 | from filing Federal bankruptcy petitions; and making |
17 | editorial changes. |
18 | The General Assembly of the Commonwealth of Pennsylvania |
19 | hereby enacts as follows: |
20 | Section 1. Section 102(b)(1) of the act of July 10, 1987 |
21 | (P.L.246, No.47), known as the Municipalities Financial Recovery |
22 | Act, is amended and the subsection is amended by adding a |
23 | paragraph to read: |
24 | Section 102. Purpose and legislative intent. |
25 | * * * |
|
1 | (b) Legislative intent.-- |
2 | (1) It is the intent of the General Assembly to: |
3 | (i) Enact procedures and provide powers and |
4 | guidelines to ensure fiscal integrity of municipalities |
5 | while leaving principal responsibility for conducting the |
6 | governmental affairs of a municipality, including |
7 | choosing the priorities for and manner of expenditures |
8 | based on available revenues, to the charge of its elected |
9 | officials, consistent with the public policy set forth in |
10 | this section. |
11 | (ii) Enact procedures for the adjustment of |
12 | municipal debt by negotiated agreement with creditors. |
13 | (iii) Provide for the exercise of the Commonwealth's |
14 | sovereign and plenary police power in emergency fiscal |
15 | conditions to protect the health, safety and welfare of a |
16 | municipality's citizens when local officials are |
17 | unwilling or unable to accept a solvency plan developed |
18 | for the benefit of the community. |
19 | * * * |
20 | (3) The General Assembly recognizes that the financial |
21 | conditions of certain distressed municipalities are so severe |
22 | and the policies of those municipalities so ineffective that |
23 | the nonviability of those municipalities threatens the fiscal |
24 | condition and credit stability of other communities. In such |
25 | cases, additional methods of protecting citizens must be |
26 | implemented, including: |
27 | (i) Instituting more direct Commonwealth oversight |
28 | pursuant to the Commonwealth's power to provide for local |
29 | government under Article IX of the Constitution of |
30 | Pennsylvania and through the creation of public |
|
1 | authorities as instrumentalities of the Commonwealth. |
2 | (ii) Judicial intervention when necessary to ensure |
3 | the compliance of the distressed municipality with the |
4 | provisions of this act. |
5 | Section 1.1. Section 251(a) of the act is amended and the |
6 | section is amended by adding a subsection to read: |
7 | Section 251. Commonwealth agency payments or assistance. |
8 | (a) Withholding of certain Commonwealth funds.--Except as |
9 | provided in section 302(b), upon certification by the |
10 | [secretary] department that a financially distressed |
11 | municipality has failed to adopt a plan or implement an adopted |
12 | plan as proposed under this act or has adopted a plan which is |
13 | inadequate to address the municipality's financial distress, the |
14 | municipality shall not receive a grant, loan, entitlement or |
15 | payment from the Commonwealth or any of its agencies. Moneys |
16 | withheld shall be held in escrow by the Commonwealth until the |
17 | [secretary] department has rescinded the certification. |
18 | (a.1) Disposition of assets.--Subsection (a) shall apply to |
19 | the failure of a distressed city or a management board |
20 | established under section 603(a) if the city or management board |
21 | fails to identify, sell, lease or otherwise dispose of assets in |
22 | accordance with section 605. |
23 | * * * |
24 | Section 1.2. The act is amended by adding a section to read: |
25 | Section 254. Review and investigation of coordinators. |
26 | (a) Initial review.--The department shall conduct a review |
27 | of all coordinators appointed or serving during 2010. The review |
28 | under this subsection shall be conducted by October 1, 2011. |
29 | Within 30 days of the completed review, the department shall |
30 | determine if the coordinator has failed to develop an adequate |
|
1 | plan or to implement the plan in an appropriate or adequate |
2 | manner. If the coordinator has failed to develop or implement |
3 | the plan in an appropriate or adequate manner, the department |
4 | shall remove the coordinator and appoint a new coordinator. |
5 | (b) Additional reviews.--The department shall conduct a |
6 | review of all coordinators appointed for service or serving |
7 | during 2011 and each year thereafter. The review under this |
8 | subsection shall be conducted by June 30. Within 30 days of the |
9 | completed review, the department shall determine if the |
10 | coordinator has failed to develop an adequate plan or to |
11 | implement the plan in an appropriate manner. If the coordinator |
12 | has failed to develop an adequate plan or to implement the plan |
13 | in an appropriate manner, the department shall remove the |
14 | coordinator and appoint a new coordinator. |
15 | (c) Investigations.--In addition to the review under |
16 | subsection (a) or (b), the department shall investigate a |
17 | complaint as to the failure of the coordinator to develop an |
18 | adequate plan or to implement the plan in an appropriate or |
19 | adequate manner. The complaint must be brought by: |
20 | (1) a petition from at least two members of the |
21 | governing body of the municipality; or |
22 | (2) a petition signed by 30 residents of the |
23 | municipality. |
24 | Section 2. The act is amended by adding a chapter to read: |
25 | CHAPTER 6 |
26 | CITIES OF THE THIRD CLASS |
27 | Section 601. Definitions. |
28 | "Business with which he is associated." The term shall have |
29 | the same meaning as defined in 65 Pa.C.S. § 1102 (relating to |
30 | definitions). |
|
1 | "City." A city of the third class which has opted to be | <-- |
2 | governed by a mayor-council form of government under the act of |
3 | July 15, 1957 (P.L.901, No.399), known as the Optional Third |
4 | Class City Charter Law, and has a population in excess of |
5 | 45,000. |
6 | "Controlled authority." A municipal authority, parking |
7 | authority or other authority or corporate entity which is |
8 | directly or indirectly controlled by a distressed city or to |
9 | which a distressed city has powers of appointment. |
10 | "County." The county in which a distressed city is located. |
11 | "Distressed city." A city which has been determined to be |
12 | financially distressed under section 203(f). The term includes |
13 | any controlled authority which is directly or indirectly |
14 | controlled by the city or to which the city has direct or |
15 | indirect power of appointment or has pledged or designated the |
16 | city's revenues or the city's credit. |
17 | "Immediate family." The term shall have the same meaning as |
18 | defined in 65 Pa.C.S. § 1102 (relating to definitions). |
19 | "Management board." The city management board. |
20 | Section 602. Applicability. |
21 | A distressed city shall be subject to the provisions of this |
22 | chapter and Chapters 2 and 3. If a conflict between this chapter |
23 | and any other provision of this act occurs, the provisions of |
24 | this chapter shall prevail. |
25 | Section 603. Management board. |
26 | (a) Establishment.--A management board shall be established |
27 | if the secretary determines that a distressed city has either |
28 | failed to adopt or has not implemented the coordinator's plan in |
29 | accordance with sections 245 and 247(a). A distressed city shall |
30 | be deemed to have failed to adopt the coordinator's plan if it |
|
1 | takes any action to approve an alternative plan under section |
2 | 246. |
3 | (b) Composition.--A management board established under |
4 | subsection (a) shall be comprised of the following: |
5 | (1) Two members appointed by the Governor, one of whom |
6 | must be a resident of the distressed city for which the board |
7 | is being appointed. |
8 | (2) One member appointed by the board of commissioners |
9 | of the county who shall be a resident of the county at the |
10 | time of appointment and shall maintain county residence while |
11 | a member of the board. |
12 | (b.1) Public officials, political party officers; conflicts |
13 | of interest prohibited.-- |
14 | (1) Members of the management board shall not: |
15 | (i) Seek or hold a position as any other elected or |
16 | appointed public official within this Commonwealth or as |
17 | a political party officer while in the service of the |
18 | management board. |
19 | (ii) Seek election as public officials or political |
20 | party officers for one year after their service with the |
21 | management board. |
22 | (2) The following apply: |
23 | (i) No member of the management board may: |
24 | (A) Directly or indirectly be a party to or have |
25 | an interest in any contract or agreement with the |
26 | distressed city. The prohibition under this clause |
27 | shall extend to a member's immediate family or a |
28 | business with which he or a member of his immediate |
29 | family is associated. |
30 | (B) Use his office or any confidential |
|
1 | information received through his office for the |
2 | private pecuniary benefit of himself, a member of his |
3 | immediate family or a business with which he or a |
4 | member of his immediate family is associated. |
5 | (ii) Any member who willfully violates this |
6 | paragraph shall forfeit his office and shall be subject |
7 | to any other criminal and civil sanctions as may be |
8 | imposed by law. Any contract or agreement knowingly made |
9 | in contravention of this paragraph shall be void. |
10 | (c) Experience and residence.-- |
11 | (1) All members and their designees shall have |
12 | experience in finance or management. |
13 | (2) All members and their designees shall be residents |
14 | of this Commonwealth. |
15 | (d) Term.--Members shall be appointed within seven days of |
16 | a determination by the secretary under subsection (a). Members |
17 | shall select a chairperson who shall serve for a term of two |
18 | years. Members appointed by the Governor shall have a term |
19 | coterminous with the appointing authority. A member appointed by |
20 | the county commissioners shall have a term coterminous with the |
21 | chairman of the board of commissioners. If a vacancy occurs, the |
22 | appointing authority who originally appointed the management |
23 | board member whose seat has become vacant shall appoint a |
24 | successor member within 30 days of the vacancy. A member |
25 | appointed to fill a vacancy occurring prior to the expiration of |
26 | a term shall serve the unexpired term. |
27 | (e) Organization.-- |
28 | (1) The Governor shall set a date, time and place for |
29 | the initial organizational meeting of the management board |
30 | within five days of the appointment of the members of the |
|
1 | management board. The initial organizational meeting shall be |
2 | held within 15 days of the appointment under subsection (d). |
3 | (2) Members shall elect other officers as they deem |
4 | necessary. |
5 | (f) Meetings.--Following the initial organizational meeting, |
6 | the management board shall meet as frequently as it deems |
7 | appropriate but at least once during each quarter of the fiscal |
8 | year. A meeting of the management board shall be called by the |
9 | chairperson if a request for a meeting is submitted by the other |
10 | two members of the management board. A majority of the |
11 | management board shall constitute a quorum. All actions of the |
12 | management board shall be taken by a majority of the management |
13 | board. The following statutes shall apply to the management |
14 | board: |
15 | (1) 65 Pa.C.S. Chs. 7 (relating to open meetings) and 11 |
16 | (relating to ethics standards and financial disclosure). |
17 | (2) The act of July 19, 1957 (P.L.1017, No.451), known |
18 | as the State Adverse Interest Act. |
19 | (3) The act of February 14, 2008 (P.L.6, No.3), known as |
20 | the Right-to-Know Law. |
21 | (g) Expenses.--A member shall not receive compensation or |
22 | remuneration but shall be entitled to reimbursement for all |
23 | reasonable and necessary expenses. |
24 | (h) Employees.--The department shall provide administrative |
25 | and other support to the management board. The management board |
26 | may contract for or receive the loan of services of other |
27 | individuals employed by other government agencies. |
28 | (i) Commonwealth agency.--A management board established |
29 | under this chapter shall constitute a public authority and |
30 | instrumentality of the Commonwealth, exercising the powers of |
|
1 | the Commonwealth. The exercise of the powers of the management |
2 | board shall be deemed to be an essential government function. |
3 | (j) Sovereign immunity.--Members of the management board |
4 | shall not be liable personally for any obligations of the |
5 | management board. It is declared to be the intent of the General |
6 | Assembly that the management board and its members shall enjoy |
7 | sovereign and official immunity as provided in 1 Pa.C.S. § 2310 |
8 | (relating to sovereign immunity reaffirmed; specific waiver) and |
9 | shall remain immune from suit except as provided by and subject |
10 | to the provisions of 42 Pa.C.S. Ch. 85 Subchs. A (relating to |
11 | general provisions) and B (relating to actions against |
12 | Commonwealth parties). |
13 | (k) Term of existence.-- |
14 | (1) The management board shall exist for an initial term |
15 | of at least seven years. The management board shall be |
16 | renewed for seven-year terms by the department unless: |
17 | (i) the city has maintained a surplus over a three- |
18 | year period and the city's revenues have exceeded |
19 | expenditures for a period of at least three-years; or |
20 | (ii) the department determines that the city has |
21 | implemented the coordinator's plan. |
22 | (2) Upon termination of the management board, records |
23 | and documents of the board shall be transferred to the |
24 | director of finance of the city. Within 60 days of |
25 | termination, the management board shall submit a final report |
26 | on its activities and the city's fiscal condition to the |
27 | Governor, the Secretary of the Senate and the Chief Clerk of |
28 | the House of Representatives. |
29 | Section 604. Powers and duties. |
30 | Notwithstanding any other provision of law, the management |
|
1 | board shall have the following powers and duties: |
2 | (1) To require the distressed city to implement the |
3 | coordinator's plan. |
4 | (2) To require the coordinator to make changes to the |
5 | coordinator's plan as necessary to achieve financial |
6 | stability of the distressed city. |
7 | (3) To require the distressed city to negotiate |
8 | intergovernmental cooperation agreements between the |
9 | distressed city and other political subdivisions in order to |
10 | eliminate and avoid deficits, maintain sound budgetary |
11 | practices and avoid interruption of municipal services. |
12 | (4) To make annual reports for submission to the |
13 | department within 120 days after the close of the distressed |
14 | city's fiscal year. |
15 | (5) To require the distressed city to cause the sale, |
16 | lease or other disposition of the distressed city's assets |
17 | under section 605. |
18 | (6) To approve or disapprove the execution of contracts |
19 | and agreements by the distressed city in accordance with | <-- |
20 | section 606(a)(2). |
21 | (7) To direct the distressed city to take any other |
22 | action to implement the coordinator's plan. |
23 | Section 605. Sale of assets. |
24 | (a) Authority.--The management board shall have the |
25 | authority to determine that it is in the best financial |
26 | interests of the distressed city to sell, lease or dispose of |
27 | assets determined by the management board to be nonessential and |
28 | owned by the distressed city. |
29 | (b) Sale, lease or other disposition.--The management board |
30 | shall: |
|
1 | (1) Identify appropriate assets for sale, lease or other |
2 | disposition and direct the appropriate officials of the |
3 | distressed city to take all action necessary or appropriate |
4 | for the consummation of the sale, lease or other disposition |
5 | of assets. |
6 | (2) Direct the distressed city to sell, lease or |
7 | otherwise dispose of assets in conformity with all applicable |
8 | competitive bidding requirements. |
9 | (3) Direct the distressed city to undertake a |
10 | competitive bidding process, determine the winning bidder and |
11 | enter into an agreement of sale, lease or other disposition |
12 | with the winning bidder. |
13 | (4) Direct the distressed city to take all action |
14 | necessary to complete the sale, lease or disposition of the |
15 | assets. |
16 | (5) Direct the distressed city to take all action |
17 | necessary to complete any pending agreement for the sale, |
18 | lease or disposition of the assets, subject to approval by |
19 | the management board. |
20 | (c) Proceeds.--The proceeds of the sale, lease or other |
21 | disposition of assets of a distressed city shall be applied to |
22 | the payment of any unpaid debt obligations owed by the |
23 | distressed city, as determined by the management board. Any |
24 | proceeds remaining after the payment of these obligations shall |
25 | be applied at the discretion of the management board to |
26 | restructure or to provide escrow for the payment of the |
27 | distressed city's future debt obligations. |
28 | (d) Enforcement.--Notwithstanding any other provision of |
29 | law, if the distressed city fails to implement the coordinator's |
30 | plan as directed by the management board, the management board |
|
1 | may take any action necessary to implement the coordinator's |
2 | plan. The management board may issue written directives to the |
3 | officials of the distressed city requiring them to perform any |
4 | act deemed necessary by the management board to properly manage |
5 | the distressed city's financial affairs and to implement the |
6 | coordinator's plan. The management board may bring an action in |
7 | mandamus in the court of common pleas where the distressed city |
8 | is situated to compel compliance with its directives. The court |
9 | shall grant the petition for mandamus if the court finds that |
10 | the distressed city has failed to abide by any of the written |
11 | directives of the management board. |
12 | (e) Removal.--If a management board determines that a |
13 | controlled authority is not taking the action necessary to sell, |
14 | lease or dispose of assets, the management board may remove the |
15 | board members of the controlled authority and appoint new board |
16 | members of the controlled authority. |
17 | Section 606. Limitation on bankruptcy. |
18 | Notwithstanding any other provision of law, including section |
19 | 261, no distressed city may file a petition for relief under 11 |
20 | U.S.C. Ch. 9 (relating to adjustment of debts of a municipality) |
21 | or any other Federal bankruptcy law, and no government agency |
22 | may authorize the distressed city to become a debtor under 11 |
23 | U.S.C. Ch. 9 or any other Federal bankruptcy law. |
24 | Section 3. The heading of Chapter 6 and section 601 of the |
25 | act are renumbered to read: |
26 | CHAPTER [6] 20 |
27 | TECHNICAL PROVISIONS |
28 | Section [601] 2001. Repeals. |
29 | Section 2501-C(e) and (f) of the act of April 9, 1929 |
30 | (P.L.177, No.175), known as The Administrative Code of 1929, are |
|
1 | repealed insofar as they are inconsistent with this act. |
2 | The act of June 11, 1935 (P.L.323, No.146), entitled "An act |
3 | designating the Department of Internal Affairs as the agency of |
4 | the Commonwealth to approve or disapprove petitions to courts, |
5 | and plans for the readjustment of debts of political |
6 | subdivisions, under the act of Congress relating to the |
7 | bankruptcy of political subdivisions; and defining the powers |
8 | and duties of said department in relation thereto," is repealed |
9 | insofar as it relates to a municipality as defined in section |
10 | 103 of this act. |
11 | Section 4. Section 602 of the act, amended December 19, 1988 |
12 | (P.L.1272, No.157), is renumbered to read: |
13 | Section [602] 2002. Expiration. |
14 | Section 203(a)(5) shall expire upon publication in the |
15 | Pennsylvania Bulletin of the notice required under section |
16 | 121(f). |
17 | Section 5. Section 603 of the act is renumbered to read: |
18 | Section [603] 2003. Effective date. |
19 | This act shall take effect in 60 days. |
20 | Section 6. The provisions of this act are severable. If any |
21 | provision of this act or its application to any person or |
22 | circumstance is held invalid, the invalidity shall not affect |
23 | other provisions or applications of this act which can be given |
24 | effect without the invalid provision or application. |
25 | Section 7. This act shall take effect immediately. |
|