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

SENATE AMENDMENTS TO HOUSE AMENDMENTS, OCTOBER 17, 2011  

AN ACT

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

act empowering the Department of Community Affairs to declare

certain municipalities as financially distressed; providing

for the restructuring of debt of financially distressed

municipalities; limiting the ability of financially

distressed municipalities to obtain government funding;

authorizing municipalities to participate in Federal debt

adjustment actions and bankruptcy actions under certain

circumstances; and providing for consolidation or merger of

contiguous municipalities to relieve financial distress,"

further providing for purpose and legislative intent;

providing for fiscal emergencies in third class cities and

for receivership for third class cities; and making editorial

changes.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1.  Section 102 of the act of July 10, 1987 (P.L.246,

No.47), known as the Municipalities Financial Recovery Act, is

amended to read:

Section 102.  Purpose and legislative intent.

(a)  Policy.--It is hereby declared to be a public policy of

the Commonwealth to foster fiscal integrity of municipalities so

that they provide for the health, safety and welfare of their

citizens; pay [due] principal and interest on their debt

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obligations when due; meet financial obligations to their

employees, vendors and suppliers; and provide for proper

financial accounting procedures, budgeting and taxing practices.

The failure of a municipality to do so is hereby determined to

affect adversely the health, safety and welfare not only of the

citizens of the municipality but also of other citizens in this

Commonwealth.

(b)  Legislative intent.--The General Assembly finds and

declares as follows:

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

(i)  Enact procedures and provide powers and

guidelines to ensure fiscal integrity of municipalities

while leaving principal responsibility for conducting the

governmental affairs of a municipality, including

choosing the priorities for and manner of expenditures

based on available revenues, to the charge of its elected

officials, consistent with the public policy set forth in

this section.

(ii)  Enact procedures for the adjustment of

municipal debt by negotiated agreement with creditors.

(iii)  Provide for the exercise of the Commonwealth's

sovereign and plenary police power in emergency fiscal

conditions to protect the health, safety and welfare of a

municipality's citizens when local officials are

unwilling or unable to accept a solvency plan developed

for the benefit of the community.

(2)  [The General Assembly further recognizes that

changing] Changing and deteriorating economic conditions,

developing technologies and attendant unemployment erode

local tax bases and threaten essential municipal services.

Under such circumstances, [the General Assembly believes

that] such distressed governmental units may no longer be

viable and that the citizens of those communities should be

granted the opportunity to voluntarily consolidate or merge

their municipalities with other municipalities in an effort

to allow municipal boundaries to reflect the geographic and

economic realities of a distressed area, to merge a common

community of interest, to take advantage of economies of

scale in providing services and to create an expanded revenue

base to provide necessary public services to the citizens of

financially distressed municipalities.

(3)  Policies of certain municipalities are so

ineffective and the financial conditions so severe that the

provision of vital and necessary services is threatened.

(4)  Sustained failure of a municipality to enact or

implement a fiscal plan to adequately address or prevent

insolvency after repeated opportunities to do so:

(i)  constitutes a fiscal emergency; and

(ii)  signifies:

(A)  a breakdown in the function of municipal

government;

(B)  a dereliction of its elected officials'

paramount public duty to safeguard the health, safety

and welfare of its citizens; and

(C)  a threat to the fiscal stability of

neighboring communities.

(5)  The Governor must act, in the face of a fiscal

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emergency under paragraph (4)(i) and dereliction of official

duty under paragraph (4)(ii)(B), pursuant Pursuant to the

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Commonwealth's paramount right and duty to maintain law and

order and protect and preserve the health, safety and welfare

of its citizens and ensure compliance with this act under

Article IX of the Constitution of Pennsylvania, the Governor

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is authorized to act in the face of a fiscal emergency under

paragraph (4)(i) and dereliction of official duty under

paragraph (4)(ii)(B).

Section 2.  The act is amended by adding chapters to read:

CHAPTER 6

FISCAL EMERGENCIES IN CITIES OF THE THIRD CLASS

Section 601.  Definitions.

The following words and phrases when used in this chapter

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Authority."  A municipal authority, parking authority or any

other authority or corporate entity that is directly or

indirectly controlled by a distressed city or to which a

distressed city has power of appointment. The term shall not

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include a joint municipal authority.

"City."  A city of the third class.

"Debt obligations."  Any obligation to pay money, including

amounts owed for payments relating to lease rental debt, debt

service, bonds, notes, guarantees for bonds or notes, trust

indentures, contracts or other agreements.

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"Distressed city."  A city which has been determined to be

financially distressed under section 203(f).

"Fiscal emergency."  A determination made by the Governor

under section 602(b).

"Insolvent."  Unable to meet all financial obligations as

they become due, including payment of debt obligations.

"Vital and necessary services."  Basic and fundamental

municipal services, including any of the following:

(1)  Police and fire services.

(2)  Ambulance and rescue services.

(3)  Water supply and distribution.

(4)  Wastewater services.

(5)  Refuse collection and disposal.

(6)  Snow removal.

(7)  Fulfillment of financial obligations necessary for

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the continued provision of one or more basic and fundamental

municipal services, including payroll Payroll and pension

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obligations, lease rental debt and all other debt

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obligations.

(8)  Fulfillment of payment of debt obligations or any

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other financial obligations.

Section 602.  Declaration of fiscal emergency.

(a)  Fiscal emergency.--A The Governor determines a fiscal

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emergency exists if the distressed city:

(1)  (i)  is insolvent or is projected to be insolvent

within 180 days or less; or

(ii)  is unable to ensure the continued provision of

vital and necessary services; and

(2)  (i)  has failed to adopt or fully implement the

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coordinator's plan; or

(ii)  has failed to adopt or fully implement an

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alternative plan that the secretary has approved under

section 246.

(b)  Governor.--Upon making a determination that a state of

fiscal emergency exists, the Governor may declare a state of

fiscal emergency within the distressed city. Immediately upon

making the declaration, the Governor shall:

(1)  Provide written notice of the declaration to the

governing body and chief executive officer of the distressed

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city along with a concise statement of facts supporting the

determination.

(2)  Direct the secretary to, within ten days of the

Governor's declaration, develop an emergency action plan to

ensure that vital and necessary services are maintained

within the city during the state of fiscal emergency.

(c)  Secretary.--In developing the emergency action plan, the

secretary shall consider the financial plan prepared by the

coordinator under Subchapter C of Chapter 2 and any other

available plan or information the secretary deems appropriate

and may employ financial or legal experts to assist in

addressing the fiscal emergency. Notwithstanding any law to the

contrary, the employment of such experts shall not be subject to

contractual competitive bidding procedures.

Section 603.  Notification by the secretary.

(a)  Notice.--Upon completion of the emergency action plan,

the secretary shall cause the plan to be posted on the

department's Internet website and shall provide written notice

of the emergency action plan by overnight delivery service,

providing proof of receipt, to all members of the governing body

and the chief executive officer of the distressed city.

(b)  Publication.--The secretary shall publish once in a

newspaper of general circulation notice that the emergency

action plan has been completed. The notice shall specify the

Internet address of the department's website where the plan is

posted.

Section 604.  Powers of the Governor.

(a)  Powers.--During the state of fiscal emergency, the

Governor may exercise the authority of the elected or appointed

officials of the distressed city or authority as necessary to

ensure the provision of vital and necessary services and may

delegate the authority to the secretary or a designee of the

secretary. The emergency powers of the Governor shall include

the following:

(1)  The power to collect funds payable to the distressed

city and authority and use those funds to pay for vital and

necessary services.

(2)  The power to obtain emergency financial aid for the

distressed city and authority under Chapter 3 to pay for

vital and necessary services.

(3)  The power to enter into contracts and agreements on

behalf of the distressed city and authority to pay for vital

and necessary services.

(4)  The power to modify the emergency action plan as

necessary to ensure the provision of vital and necessary

services.

(5)  Any other power of the elected or appointed

officials of the distressed city or authority to ensure the

provision of vital and necessary services.

(b)  Orders.--The Governor may issue an order to an elected

or appointed official of the distressed city or an authority to

implement any provision of the emergency action plan or refrain

from taking any action that would interfere with the powers

granted to the Governor or the goals of the plan. An order

issued under this subsection shall be enforceable under section

606.

(c)  Authorization prohibited.--Neither this chapter nor the

emergency action plan shall be interpreted to authorize the

Governor to:

(1)  unilaterally levy taxes;

(2)  unilaterally abrogate, alter or otherwise interfere

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

(i)  held by a holder of a debt obligation of a

distressed city; and

(ii)  granted by the contract, law, rule or

regulation governing the debt obligation.

(3)  Unilaterally impair or modify existing bonds, notes,

municipal securities or other uncontested lawful contractual

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or legal obligations of the distressed city or authority, 

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except as otherwise ordered by a court of competent

jurisdiction.

(4)  Authorize the use of the proceeds of the sale,

lease, conveyance, assignment or other use or disposition of

the assets of the distressed city or authorities in a manner

contrary to section 707.

(5)  Pledge the full faith and credit of the

Commonwealth.

Section 605.  Elected and appointed officials.

During a fiscal emergency, the authorities and appointed and

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elected officials of the distressed city shall continue to carry

out the duties of their respective offices, except that no

decision or action shall conflict with an emergency action plan,

order or exercise of power by the Governor under section 604.

Section 606.  Mandamus.

The Governor may petition Commonwealth Court to issue a writ

of mandamus upon any elected or appointed official of the

distressed city or authority to secure compliance with an order

issued under section 604(b). The court shall grant the relief

requested within 14 days of the filing of the petition if it

determines that the order was issued in compliance with this

chapter.

Section 607.  Consent agreement.

(a)  Negotiations.--Within eight days of the declaration of a

fiscal emergency, the governing body and chief executive officer

of the distressed city shall convene a special public meeting to

negotiate a consent agreement. The meeting shall be attended by

the secretary or secretary's designee. Negotiations among

creditors and any of the parties in this subsection shall be

conducted in accordance with section 223(b).

(b)  Contents.--

(1)  The consent agreement shall incorporate a plan

setting forth measures designed to provide long-term

financial stability to the distressed city after the

termination of the fiscal emergency.

(2)  The consent agreement shall include all of the

following:

(i)  Continued provision of vital and necessary

services.

(ii)  Payment of the lawful financial obligations of

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the distressed city and authority. This subparagraph

includes debt obligations, municipal securities, lease

rental obligations, uncontested legal obligations and

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consensual modifications of existing obligations, except

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as otherwise ordered by a court of competent

jurisdiction.

(iii)  Timely deposit of required payments to the

pension fund for the distressed city and each authority

or the fund in which the distressed city and each

authority participates.

(iv)  Legislative and administrative actions to be

taken by the elected or appointed officials of the

distressed city during the term of the consent agreement.

(3)  The consent agreement may include:

(i)  The sale, lease, conveyance, assignment or other

use or disposition of the assets of the distressed city

or authority.

(ii)  Approval, modification, rejection,

renegotiation or termination of contracts or agreements

of the distressed city or authorities.

(iii)  Execution of new contracts or agreements.

(4)  The consent agreement may not include any of the

following:

(i)  Projections of revenue from a tax or tax rate

not currently authorized by law.

(ii)  Provisions that unilaterally abrogate, alter or

otherwise interfere with a lien, charge, covenant or

relative priority, that is:

(A)  held by a holder of a debt obligation of a

distressed city; and

(B)  granted by the contract, law, rule or

regulation governing the debt obligation.

(iii)  Provisions that unilaterally impair or modify

existing bonds, notes or, municipal securities or other

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lawful contractual or legal obligations of the distressed

city or authority, except as otherwise ordered by a court

of competent jurisdiction.

(iv)  Provisions that authorize the use of the

proceeds of the sale, lease, conveyance, assignment or

other use or disposition of the assets of the distressed

city or authorities in a manner contrary to section 707.

(v)  Any increase in the rate of an earned income tax

imposed on nonresident workers.

(c)  Ordinance.--Notwithstanding any law to the contrary, the

following shall apply:

(1)  Upon approval by a majority vote of the governing

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body of the distressed city, the consent agreement shall be

presented to the secretary within 20 days of the declaration

of fiscal emergency.

(2)  The secretary shall approve or disapprove the

consent agreement within three days.

(3)  If the secretary determines that the consent

agreement is sufficient to overcome the distressed city's

financial distress and approves the agreement, the governing

body shall enact the consent agreement in the form of an

ordinance within seven days of approval by the secretary.

(4)  The ordinance shall provide that, in the event of a

breach or unilateral modification of the consent decree by

the governing body or an elected or appointed official, the

Governor may institute or reinstitute proceedings under

Chapter 7.

(d)  Consent to proceedings under Chapter 7.-–In addition to

breach or modification of the consent agreement under subsection

(c), the following shall be deemed consent to proceedings under

Chapter 7:

(1)  Failure of the governing body of the distressed city

to convene, or the failure of a quorum of the governing body

to participate in, a special public meeting required by

subsection (a).

(2)  Failure of the governing body or chief executive

officer to enact a valid ordinance under subsection (c).

(3)  Failure of the distressed city to comply with the

consent agreement or provision of an ordinance enacted under

subsection (c).

(4)  Enactment by the distressed city of an amendment to

the ordinance enacted in subsection (c) in violation of

subsection (e).

(e)  Amendment.--The ordinance may be amended upon the

approval of the secretary.

(f)  Collective bargaining.--A collective bargaining

agreement or arbitration settlement executed following enactment

of an ordinance under this section is void to the extent that it

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violates, expands or diminishes may not in any manner violate,

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expand or diminish the provisions of the consent agreement.

Section 608.  Termination of fiscal emergency and suspension of

powers.

(a)  Financial emergency.--A fiscal emergency shall end upon

certification by the secretary that the city is no longer

financially distressed.

(b)  Governor's powers.--The emergency powers of the Governor

under this chapter shall be suspended upon the enactment and

continued implementation of an ordinance under section 607 or

entry of a judicial order appointing a receiver under section

702.

Section 609.  Restrictions.

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

subject to this chapter or Chapter 7 may not petition a court of

common pleas for an increase in the rate of an earned income tax

imposed on nonresident workers under section 123(c) until the

secretary terminates the distress status of the city under

section 253.

(b)  Municipal debt adjustment.--A distressed city subject to

this chapter or Chapter 7 may not file a municipal debt

adjustment action under Federal law the Bankruptcy Code (11

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U.S.C. § 101 et seq.) except to the extent authorized under

Chapter 7.

Section 610.  Applicability.

(a)  Statement.--

(1)  This chapter shall apply only to distressed cities.

(2)  Except as set forth in subsection (b), nothing in

this chapter is intended to limit or otherwise abrogate the

applicability of any other part of this act.

(b)  Conflict.--If there is a conflict between a provision of

this chapter and any other provision of this act, the provision

of this chapter shall prevail.

CHAPTER 7

RECEIVERSHIP IN CITIES OF THE THIRD CLASS

Section 701.  Definitions.

The following words and phrases when used in this chapter

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Authority."  A municipal authority, parking authority or any

other authority or corporate entity that is directly or

indirectly controlled by a distressed city or to which a

distressed city has power of appointment. The term shall not

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include a joint municipal authority.

"City."  A city of the third class.

"Debt obligations."  Any obligation to pay money, including

amounts owed for payments relating to lease rental debt, debt

service, bonds, notes, guarantees for bonds or notes, trust

indentures, contracts or other agreements.

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"Distressed city."  A city which has been determined to be

financially distressed under section 203(f).

"Fiscal emergency."  A determination made by the Governor

under section 602(b).

"Insolvent."  Unable to meet all financial obligations as

they become due, including payment of debt obligations.

"Vital and necessary services."  Basic and fundamental

municipal services, including any of the following:

(1)  Police and fire services.

(2)  Ambulance and rescue services.

(3)  Water supply and distribution.

(4)  Wastewater services.

(5)  Refuse collection and disposal.

(6)  Snow removal.

(7)  Fulfillment of financial obligations necessary for

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the continued provision of one or more basic and fundamental

municipal services, including payroll Payroll and pension

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obligations, lease rental debt and all other debt

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obligations.

(8)  Fulfillment of payment of debt obligations or any

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other financial obligations.

Section 702.  Receivership.

(a)  Receiver.--Following the issuance of a declaration of

fiscal emergency under section 602(b), the Governor may direct

the secretary to file a petition in Commonwealth Court to

appoint the individual named in the petition as a receiver for

the distressed city. The court shall have no authority to

appoint anyone other than the individual named in the petition

as the receiver.

(b)  Service and notice.--

(1)  The secretary shall serve the petition upon:

(i)  the governing body of the distressed city;

(ii)  the chief executive officer of the distressed

city; and

(iii)  the governing body of each authority.

(2)  The secretary must publish notice of the filing of

the petition once in a newspaper of general circulation.

(c)  Hearing.--Within 15 days Upon notification of the

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Governor of the failure of the distressed city to adopt a valid

ordinance under section 607, the Commonwealth Court shall

conduct a hearing within 15 days on the petition.

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(d)  Determination.--No later than 60 days following the

filing of a petition under this section, the court shall issue

an order under subsection (e) if it finds by a preponderance of

the evidence that all of the following apply:

(1)  Thirty days have passed since the declaration of a

fiscal emergency.

(2)  There has been a failure by:

(i)  the governing body of the distressed city to

adopt a consent agreement acceptable to the secretary an

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ordinance under section 607;

(ii)  the governing body of the distressed city to

fully implement a consent agreement acceptable to the

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secretary an ordinance under section 607; or

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(iii)  an elected or appointed official of the

distressed city or authority to strictly comply with an

order issued by the Governor under section 604.

(3)  A fiscal emergency under section 602(a) continues to

exist.

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

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

(2)  grant the petition and declares declare the

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distressed city to be in receivership;

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

the receiver for a period not to exceed two years, subject to

extension under section 710(b);

(4)  direct the receiver to develop a recovery plan 

within 30 days under section 703 and submit it to the court, 

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the secretary, the governing body and chief executive officer 

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of the distressed city and the secretary; and

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(5)  require and empower the receiver to implement the

emergency action plan developed by the secretary under

section 602 until a recovery plan developed by the receiver

is approved by the court under section 703.

(f)  Additional actions.--

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

petition in Commonwealth Court to appoint an individual named

in the petition as a receiver for the distressed city if the

distressed city fails to comply with or has amended the

ordinance without the approval of the secretary under section

607(d)(3) or (4).

(2)  The court shall conduct a hearing on the petition

under paragraph (1) within 15 days of the filing of the

petition.

(3)  No later than 60 days following the filing of the

petition under paragraph (1), the court shall issue an order

under subsection (e) if it finds by a preponderance of the

evidence that the distressed city has failed to comply with

section 607(d)(3) or (4).

Section 703.  Recovery plan.

(a)  Issuance.--Within 30 days of the appointment of the

receiver, the recovery plan required under section 702(e)(4)

shall be furnished to Commonwealth Court, the secretary and the

governing body and chief executive officer of the distressed

city.

(b)  Contents.--The receiver shall consider the plan prepared

by the coordinator under section 241 and any other existing

alternate plans in the development of the recovery plan. The

following shall apply:

(1)  The recovery plan shall provide for all of the

following:

(i)  Continued provision of vital and necessary

services.

(ii)  Payment of the lawful financial obligations of

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the distressed city and authorities. This subparagraph

includes debt obligations, municipal securities, lease

rental obligations, uncontested legal obligations and

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consensual modifications of existing obligations.

(iii)  Timely deposit of required payments to the

pension fund in which the distressed city and each

authority participates.

(2)  The recovery plan may inlcude include:

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(i)  the sale, lease, conveyance, assignment or other

use or disposition of the assets of the distressed city

or authority;

(ii)  the approval, modification, rejection,

renegotiation or termination of contracts or agreements

of the distressed city or authorities, except to the

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extent prohibited by the Constitutions of the United

States and Pennsylvania;

(iii)  the execution of new contracts or agreements;

and

(iv)  other information the receiver deems

appropriate.

(c)  Restrictions.--The recovery plan may not do any of the

following:

(1)  Unilaterally levy taxes.

(2)  Unilaterally abrogate, alter or otherwise interfere

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

(i)  held by a holder of a debt obligation of a

distressed city; and

(ii)  granted by the contract, law, rule or

regulation governing the debt obligation.

(3)  Unilaterally impair or modify existing bonds, notes

or, municipal securities or other lawful contractual or legal

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obligations of the distressed city or authority, except as

otherwise ordered by a court of competent jurisdiction.

(4)  Authorize the use of the proceeds of the sale,

lease, conveyance, assignment or other use or disposition of

the assets of the distressed city or authority in a manner

contrary to section 707.

(d)  Confirmation.--Commonwealth Court shall conduct a

hearing on the recovery plan within 30 days of the receipt of

the plan from the receiver. The court shall confirm the plan

within 60 days of the receipt of the plan unless it finds clear

and convincing evidence that the plan is arbitrary, capricious

or wholly inadequate to alleviate the fiscal emergency in the

distressed city.

(e)  Modification of plan.--The receiver shall notify the

Commonwealth Court of any modification to the plan. The court

may conduct a hearing on the modification within 30 days of its

receipt. The court shall confirm the modification within 60 days

of receipt of notification of the modification unless it finds

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clear and convincing evidence that the recovery plan as modified

is arbitrary, capricious or wholly inadequate to alleviate the

fiscal emergency in the distressed city.

Section 704.  Confirmation.

(a)  Effect of confirmation.--The confirmation of the

recovery plan and any modification to the receiver's plan under

section 703 shall have the effect of:

(1)  imposing on the elected and appointed officials of

the distressed city or an authority a mandatory duty to

undertake the acts set forth in the recovery plan;

(2)  suspending the authority of the elected and

appointed officials of the distressed city or an authority to

exercise power on behalf of the distressed city or authority

pursuant to law, charter, ordinance, rule or regulation to

the extent that the power would interfere with the powers

granted to the receiver or the goals of the recovery plan;

and

(3)  superseding the emergency action plan developed by

the secretary under section 602.

(b)  Form of government.--Confirmation of the recovery plan

and any modification to the plan under section 703 shall not be

construed to:

(1)  change the form of government of the distressed city

or an authority; or

(2)  except as set forth in subsection (a), affect powers

and duties of elected and appointed officials of the

distressed city or an authority.

(c)  Collective bargaining.--A collective bargaining

agreement or arbitration settlement executed after confirmation

of a recovery plan is void to the extent that it violates,

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expands or diminishes may not in any manner violate, expand or

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diminish the provisions of the recovery plan.

Section 705.  Receiver.

(a)  Appointment.--The court shall appoint the receiver as

provided under section 702.

(b)  Qualifications.--The receiver shall have the following

qualifications:

(1)  Have a minimum of five years' experience and

demonstrable expertise in business, financial or local or

state budgetary matters.

(2)  Be a resident of this Commonwealth for at least one

year prior to the appointment.

(c)  Vacancy.--A vacancy in the office of the receiver shall

be filled in the same manner as the original appointment.

(d)  Revocation.--Upon application to Commonwealth Court by

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the secretary, the appointment of the receiver shall be revoked

and the receiver shall be replaced by the individual named in

the application. The court shall have no authority to appoint

anyone other than the individual named in the application as the

receiver.

(e)  Compensation and expenses.--The receiver's compensation

and reimbursement for actual and necessary expenses shall be

paid by the Commonwealth. Compensation shall be established by

the secretary.

(f)  Prohibitions.--The receiver shall not:

(1)  Seek or hold a position as any other elected or

appointed public official within this Commonwealth or as a

political party officer during the term of the receivership.

(2)  Seek election as a public official or political

party officer for one year after the person's service as

receiver has ended.

(3)  Engage in any conduct prohibited by the act of July

19, 1957 (P.L.1017, No.451), known as the State Adverse

Interest Act, or 65 Pa.C.S. Ch. 11 (relating to ethics

standards and financial disclosure).

(g)  Liability.--The receiver shall not be liable personally

for any obligations of the distressed city or authority. It is

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declared to be the intent of the General Assembly that the

receiver shall enjoy sovereign and official immunity as provided

in 1 Pa.C.S. § 2310 (relating to sovereign immunity reaffirmed;

specific waiver) and shall remain immune from suit except as

provided by and subject to the provisions of 42 Pa.C.S. Ch. 85

Subchs. A (relating to general provisions) and B (relating to

actions against Commonwealth parties).

Section 706.  Powers, duties and prohibited actions.

(a)  Powers and duties.--Notwithstanding any other provision

of law, the receiver shall have the following powers and duties:

(1)  To require the distressed city or authority to take

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actions necessary to implement the recovery plan under

section 703.

(2)  To modify the recovery plan as necessary to achieve

financial stability of the distressed city and authorities in

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accordance with section 703.

(3)  To require the distressed city or authority to

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negotiate intergovernmental cooperation agreements between

the distressed city and other political subdivisions in order

to eliminate and avoid deficits, maintain sound budgetary

practices and avoid interruption of municipal services.

(4)  To submit quarterly reports to the governing body

and the chief executive officer of the distressed city and to

the department. The reports shall be posted on the Internet

website for the distressed city.

(5)  To require the distressed city or authority to cause

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the sale, lease, conveyance, assignment or other use or

disposition of the distressed city's or authority's assets in

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accordance with section 707.

(6)  To approve, disapprove, modify, reject, terminate or

renegotiate contracts and agreements with the distressed city 

or authority, except to the extent prohibited by the

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Constitutions of the United States and Pennsylvania.

(7)  To direct the distressed city or authority to take

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any other action to implement the recovery plan.

(8)  To attend executive sessions of the governing body

of the distressed city or authority and make reports to the

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public on implementation of the recovery plan.

(9)  Subject to the limitation on bankruptcy in Article

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XVI-D.1 of the act of April 9, 1929 (P.L.343, No.176), known

as The Fiscal Code After July 1, 2012, to file a municipal

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debt adjustment action under Federal law the Bankruptcy Code

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(11 U.S.C. § 101 et seq.) and to act on the city's behalf in

the proceeding. The power under this paragraph shall only be

exercised upon the written authorization of the secretary.  

The filing of a municipal debt adjustment action under this

paragraph and any plan of the receiver accepted by the

Federal court shall be considered a modification of the

recovery plan, except that the modification shall not be

subject to judicial review under section 709. A recovery plan

submitted to, and approved by, the Federal court under a

Federal municipal debt adjustment action may include Federal

remedies not otherwise available under this chapter.

(10)  To meet and consult with the advisory committee

under section 711.

(11)  To employ financial or legal experts deemed

necessary to develop and implement the recovery plan.

Notwithstanding any law to the contrary, the employment of

such experts shall not be subject to contractual competitive

bidding procedures.

(b)  Authorization prohibited.--Neither this chapter nor the

recovery plan shall be interpreted to authorize the receiver to

do any of the following:

(1)  Unilaterally levy taxes.

(2)  Unilaterally abrogate, alter or otherwise interfere

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

(i)  held by a holder of a debt obligation of a

distressed city; and

(ii)  granted by the contract, law, rule or

regulation governing the debt obligation.

(3)  Unilaterally impair or modify existing debt

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obligations or bonds, notes, municipal securities or other

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lawful contractual or legal obligations of the distressed

city or authority, except as otherwise ordered by a court of

competent jurisdiction.

(4)  Authorize the use of the proceeds of the sale,

lease, conveyance, assignment or other use or disposition of

the assets of the distressed city or authority in a manner

contrary to section 707.

Section 707.  Use or disposition of assets.

(a)  Use of proceeds.--The proceeds from any sale, lease,

conveyance, assignment or other use or disposition of assets of

the distressed city or authority shall be applied to the payment

of outstanding debt obligations owed by the distressed city or

authority, subject to any lien, charge, covenant, restriction,

contract, law, rule or regulation, that encumbers or is

otherwise applicable to the assets. Proceeds remaining after

payment of outstanding debt obligations owed by the distressed

city or authority may be used by the receiver to restructure or

provide escrow for the payment of future debt obligations or to

meet operating and capital needs of the distressed city or

authority.

(b)  Prohibitions.--Nothing under this section shall be

construed to authorize the receiver to unilaterally abrogate,

alter or otherwise interfere with a lien, charge, covenant or

relative priority that is:

(1)  held by a holder of a debt obligation of a

distressed city; and

(2)  granted by the contract, law, rule or regulation

governing the debt obligation.

Section 708.  Elected and appointed officials.

(a)  Orders.--The receiver may issue an order to an elected

or appointed official of the distressed city or an authority to:

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

(2)  refrain from taking any action that would interfere

with the powers granted to the receiver or the goals of the

recovery plan.

(b)  Enforcement.--An order issued under subsection (a) shall

be enforceable under section 709.

Section 709.  Judicial actions.

(a)  Action by receiver.--The receiver may petition

Commonwealth Court to issue a writ of mandamus upon any elected

or appointed official of the distressed city or authority to

secure compliance with an order issued under section 708. The

court shall grant or deny the relief within 14 days of the

filing of the petition. The court shall grant the relief

requested if it determines that the order was issued in

compliance with this chapter.

(b)  Action by elected or appointed officials.--Any elected

or appointed official of a distressed city or authority may

petition Commonwealth Court to enjoin any action of the receiver

that is contrary to this chapter.

Section 710.  Termination of receivership.

(a)  Time.--Except as provided under subsection (b), the

receivership under this chapter shall expire two years after the

appointment of the receiver.

(b)  Extension.--The secretary may petition Commonwealth

Court for one or more extensions of the receivership. The court

shall grant each extension for another two years if the

secretary establishes by a preponderance of the evidence that

further implementation of the recovery plan is necessary to end

the fiscal emergency.

Section 711.  Municipal Financial Recovery Advisory Committee.

(a)  Establishment.--There is established a Municipal

Financial Recovery Advisory Committee to meet and consult with

the receiver in carrying out the duties under this chapter. The

sole function of the advisory committee shall be to provide

recommendations and feedback to the receiver on the

implementation of the recovery plan.

(b)  Composition.--The advisory committee established under

subsection (a) shall be comprised of the following:

(1)  The chief executive officer of the distressed city

or a designee.

(2)  The president of the governing body of the

distressed city or a designee.

(3)  One member appointed by the county commissioners of

the county where the distressed city is located.

(4)  One member appointed by the Governor.

(c)  Compensation.--Members of the advisory committee shall

receive no compensation for their services.

(d)  Meetings.--The advisory committee shall meet with the

receiver at least twice per month to discuss the recovery plan.

Meetings of the advisory committee shall be in accordance with

65 Pa.C.S. Ch. 7 (relating to open meetings).

(e)  Duty to consult.--The receiver shall consult with the

advisory committee prior to exercising any of the powers under

section 706(a)(1), (2), (3), (5), (6), (7) and (9).

(f)  Termination.--The advisory committee shall terminate in

conjunction with the expiration of the receivership as provided

for under section 710.

Section 712.  Applicability.

(a)  Statement.--

(1)  This chapter shall apply only to distressed cities.

(2)  Except as set forth in subsection (b), nothing in

this chapter is intended to limit or otherwise abrogate the

applicability of any other part of this act.

(b)  Conflict.--If there is a conflict between a provision of

this chapter and any other provision of this act, the provision

of this chapter shall prevail.

Section 3.  The heading of Chapter 6 and section 601 of the

act are renumbered to read:

CHAPTER [6] 20

TECHNICAL PROVISIONS

Section [601] 2001.  Repeals.

Section 2501-C(e) and (f) of the act of April 9, 1929

(P.L.177, No.175), known as The Administrative Code of 1929, are

repealed insofar as they are inconsistent with this act.

The act of June 11, 1935 (P.L.323, No.146), entitled "An act

designating the Department of Internal Affairs as the agency of

the Commonwealth to approve or disapprove petitions to courts,

and plans for the readjustment of debts of political

subdivisions, under the act of Congress relating to the

bankruptcy of political subdivisions; and defining the powers

and duties of said department in relation thereto," is repealed

insofar as it relates to a municipality as defined in section

103 of this act.

Section 4.  Section 602 of the act, amended December 19, 1988

(P.L.1272, No.157), is renumbered to read:

Section [602] 2002.  Expiration.

Section 203(a)(5) shall expire upon publication in the

Pennsylvania Bulletin of the notice required under section

121(f).

 Section 5.  Section 603 of the act is renumbered to read:

Section [603] 2003.  Effective date.

This act shall take effect in 60 days.

Section 6.  The provisions of this act are severable. If any

provision of this act or its application to any person or

circumstance is held invalid, the invalidity shall not affect

other provisions or applications of this act which can be given

effect without the invalid provision or application.

Section 7.  This act shall take effect immediately.