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

1act empowering the Department of Community [Affairs] and 
2Economic Development to assist municipalities in avoiding 
3financial distress; declare certain municipalities as
4financially distressed; providing for the restructuring of
5debt of financially distressed municipalities; limiting the
6ability of financially distressed municipalities to obtain
7government funding; authorizing municipalities to participate
8in Federal debt adjustment actions and bankruptcy actions
9under certain circumstances; authorizing certain taxes; and
10providing for [consolidation or merger of contiguous
11municipalities to relieve financial distress] the 
12disincorporation of municipalities and the establishment of 
13unincorporated service districts.

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

16Section 102. Purpose and legislative intent.

17(a) Policy.--It is hereby declared to be a public policy of
18the Commonwealth to foster fiscal integrity of municipalities so
19that they provide for the health, safety and welfare of their
20citizens; pay principal and interest on their debt obligations
21when due; meet financial obligations to their employees, vendors
22and suppliers; and provide for proper financial accounting
23procedures, budgeting and taxing practices. The failure of a
24municipality to do so is hereby determined to affect adversely
25the health, safety and welfare not only of the citizens of the
26municipality but also of other citizens in this Commonwealth.

27(b) Legislative intent.--The General Assembly finds and 
28declares as follows:

29(1) It is the intent of the General Assembly to:

30(i) Enact procedures to provide municipalities

1showing early indicators of financial distress with
2training and technical and financial assistance.

3[(i)] (ii) Enact procedures and provide powers and
4guidelines to ensure fiscal integrity of municipalities
5while leaving principal responsibility for conducting the
6governmental affairs of a municipality, including
7choosing the priorities for and manner of expenditures
8based on available revenues, to the charge of its elected
9officials, consistent with the public policy set forth in
10this section.

11[(ii)] (iii) Enact procedures for the adjustment of
12municipal debt by negotiated agreement with creditors.

13[(iii)] (iv) Provide for the exercise of the
14Commonwealth's sovereign and plenary police power in
15emergency fiscal conditions to protect the health, safety
16and welfare of a municipality's citizens when local
17officials are unwilling or unable to accept a solvency
18plan developed for the benefit of the [community]
19municipality.

20(v) Provide for the exercise of the Commonwealth's
21sovereign and plenary power to establish and abolish
22local government units and provide essential services in
23areas of this Commonwealth in which the fiscal integrity
24of existing local government units cannot be sustained.

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

1with law to voluntarily consolidate or merge their
2municipalities with other municipalities in an effort to
3allow municipal boundaries to reflect the geographic and
4economic realities of a distressed area, to merge a common
5community of interest, to take advantage of economies of
6scale in providing services and to create an expanded revenue
7base to provide necessary public services to the citizens of
8financially distressed municipalities.

9(3) Policies of certain municipalities are so
10ineffective and the financial conditions so severe that the
11provision of vital and necessary services is threatened.

12(4) Sustained failure of a municipality to enact or
13implement a fiscal plan to adequately address or prevent
14insolvency after repeated opportunities to do so:

15(i) constitutes a fiscal emergency; and

16(ii) signifies:

17(A) a breakdown in the function of municipal
18government;

19(B) a dereliction of its elected officials'
20paramount public duty to safeguard the health, safety
21and welfare of its citizens; and

22(C) a threat to the fiscal stability of
23neighboring communities.

24(5) Pursuant to the Commonwealth's paramount right and
25duty to maintain law and order and protect and preserve the
26health, safety and welfare of its citizens and ensure
27compliance with this act under Article IX of the Constitution
28of Pennsylvania, the Governor is authorized to act in the
29face of a fiscal emergency under paragraph (4)(i) and
30dereliction of official duty under paragraph (4)(ii)(B).

1(6) Municipalities may face such deteriorated economic 
2conditions that all reasonable efforts to restore economic 
3viability have failed and merger or consolidation cannot 
4occur through any means provided by law. It is the intent of 
5the General Assembly that, for municipalities incapable of 
6continuing to function as general purpose units of local 
7government, procedures exist to ensure the provision of 
8essential and vital public services to the residents of those 
9areas absent a functioning municipal government.

10Section 3. Section 103 of the act, repealed Oct. 13, 1994
11(P.L.596, No.90) and added July 5, 2012 (P.L.1104, No.133), is 
12amended to read:

13Section 103. Definitions.

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

17"Arbitration settlement." An adjustment or settlement of a
18collective bargaining agreement or dispute. The term includes a
19final or binding arbitration award or other determination.

20"Authority." A municipal authority, parking authority or any
21other authority or corporate entity that is directly or
22indirectly controlled by a distressed municipality or to which a
23distressed municipality has power of appointment.

24"Basis of accounting." Revenues and expenditures may be
25recognized on the cash, modified accrual or full accrual basis
26of accounting, provided that basis is applied consistently
27throughout the fiscal periods reported for evaluation purposes.

28"Chief executive officer." Mayor in a mayor-council form of
29government or manager in a council-manager form of government of
30a city operating under an optional form of government pursuant

1to the act of July 15, 1957 (P.L.901, No.399), known as the
2Optional Third Class City Charter Law; a mayor of a city of the
3first class under the act of April 21, 1949 (P.L.665, No.155),
4known as the First Class City Home Rule Act; or an individual
5serving in such capacity as designated by a home rule charter or
6optional plan pursuant to the act of April 13, 1972 (P.L.184,
7No.62), known as the Home Rule Charter and Optional Plans Law.

8"Claim." Right to payment, whether or not the right is
9reduced to judgment, liquidated, unliquidated, fixed,
10contingent, matured, unmatured, disputed, undisputed, legal,
11equitable, secured or unsecured; or right to an equitable remedy
12for breach of performance if the breach gives rise to a right to
13payment, whether or not the right to an equitable remedy is
14reduced to judgment, fixed, contingent, matured, unmatured,
15disputed, undisputed, secured or unsecured.

16"Commonwealth agency." The Governor and the departments,
17boards, commissions, authorities and other officers and agencies
18of this Commonwealth, whether or not subject to the policy
19supervision and control of the Governor.

20"Creditor." An individual, partnership, corporation,
21association, estate, trust, governmental unit or the governing
22board of a pension fund of a municipality that has a claim
23against a municipality.

24"Deficit." The excess of expenditures over revenues, stated
25as a percentage of revenue, during an accounting period. This
26calculation shall include all governmental fund types and all
27proprietary fund types, but shall exclude all fiduciary fund
28types of the municipality.

29"Department." The Department of Community [Affairs] and 
30Economic Development of the Commonwealth.

1"Expenditures." Reductions in fund equity, including current
2operating expenses that require the use of fund equity, debt
3service and capital outlays. The term shall not include
4interfund transfers.

5"Fund equity." Excess of assets of a fund over its
6liabilities.

7"Governing body." The council in cities, boroughs and
8incorporated towns; the board of commissioners in counties; the
9board of commissioners in townships of the first class; the
10board of supervisors in townships of the second class; or the
11legislative policy-making body in home rule municipalities.

12"Matured claim." A claim that has been reduced to judgment
13or liquidated in amount by agreement for a period of 90 days
14prior to the filing of a petition to commence fiscal distress
15proceedings under this act.

16"Municipal record." A financial record [and] or document of
17a municipality or of [an authority incorporated by a
18municipality, excluding confidential] an authority or other 
19corporate entity which directly or indirectly performs a 
20governmental function on behalf of the municipality, is directly 
21or indirectly controlled by the municipality or to which the 
22municipality has direct or indirect power of appointment or has 
23directly or indirectly pledged or designated the municipality's 
24revenues or the municipality's credit. The term does not 
25include:

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

1and the remainder subject to disclosure as otherwise provided 
2by this act.

3(2) A financial record or document in the custody or
4control of an entity other than a municipality, municipal
5authority or other authority, except if the document relates
6to services or governmental functions performed by the
7municipality, municipal authority or on behalf of the
8municipality or municipal authority, or the revenues or
9credit of the municipality or a municipal authority.

10"Municipality." Every county, city, borough, incorporated
11town, township and home rule municipality.

12"Plan" or "recovery plan." A recovery plan developed under
13this act.

14"Revenues." Additions to fund equity other than from
15interfund transfers, proceeds of debt and proceeds of
16disposition of general fixed assets.

17"Secretary." The Secretary of Community [Affairs] and 
18Economic Development of the Commonwealth.

19Section 4. Section 121(a), (b) and (c) of the act are
20amended to read:

21Section 121. Powers and duties of department.

22(a) Compile financial data.--

23(1) A power and duty of the department shall be to
24maintain accurate and current information and data on the
25fiscal status of municipalities to determine if criteria set
26forth in section 201 exist and, if so, whether the existence
27of those factors validly indicates fiscal distress.

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

1applicable to the municipality's prior fiscal year.

2(i) The survey shall seek information necessary to
3determine the fiscal status of a municipality, shall be
4concise to facilitate prompt response and shall contain
5an attestation clause to be signed by the presiding
6officer of the municipality's governing body. [The actual
7survey form shall not exceed two pages in length.]

8(ii) The survey shall be provided to the municipal
9clerk or municipal secretary along with tax information
10forms in accordance with law.

11(iii) The survey shall include information based on
12the criteria specified in section 201.

13(iv) The survey shall include information relating
14to the basis of accounting utilized by municipalities.

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

1application as provided in Chapter 1-A. If the municipality
2adopts those recommendations, the department need take no
3further action.

4(c) Notify agencies of determination.--Upon the making of a
5determination by the secretary that a municipality is distressed
6pursuant to section 203(f), the department shall immediately
7notify the heads of all Commonwealth agencies of the
8determination. The department shall, by January 1 of each year 
9thereafter, notify the heads of all Commonwealth agencies of the
10priority funding requirement for distressed municipalities as 
11provided in section 282.

12* * *

13Section 5. Section 122 of the act is amended by adding a
14subsection to read:

15Section 122. Duties of Commonwealth agencies.

16* * *

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

18(1) Notwithstanding any provision of law and at the
19request of the coordinator or receiver, a Commonwealth agency
20may exempt a distressed municipality from the application of
21a regulatory requirement, if the following conditions are
22satisfied:

23(i) The regulatory requirement is not expressly
24required by Federal law or regulation, or an act of the
25Commonwealth, and is not related to the rights or terms
26and conditions of employment by the municipality.

27(ii) The waiver of the regulatory mandate will not
28likely affect public health and safety.

29(2) It is the intent of this subsection that distressed
30municipalities be considered for relief from regulatory

1mandates that, due to financial distress or the
2implementation of recovery measures, are unduly burdensome on
3the municipality and would not undermine the regulatory
4purposes of the agency if waived.

5Section 6. Sections 123 and 141 of the act, amended July 11,
61996 (P.L.645, No.108), are amended to read:

7Section 123. Powers and duties of municipalities.

8(a) File completed survey.--On or before March 15 of each
9year, every municipality shall return to the department a
10completed Survey of Financial Conditions referred to in section
11121(a). No municipality shall receive its alloted payments
12pursuant to the act of June 1, 1956 (1955 P.L.1944, No.655),
13referred to as the Liquid Fuels Tax Municipal Allocation Law,
14unless it complies with the provisions of this section,
15notwithstanding a provision of law to the contrary, including 
16any provisions which require payment prior to March 15, and the
17Department of Transportation may not disburse funds to a
18municipality pursuant to the Liquid Fuels Tax Municipal
19Allocation Law until notified by the department that the
20municipality has complied with the provisions of this section.

21(b) File applications for grants and loans.--A financially
22distressed municipality may apply to the secretary for emergency
23financial aid in the form of a grant or loan pursuant to Chapter
243.

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

26(1) After a municipality has adopted a plan under
27[Subchapter C] Subchapters C and C.1 of Chapter 2, it may
28petition the court of common pleas of the county in which the
29municipality is located to increase its rates of taxation for
30earned income of residents and nonresidents, real property,

1or both, beyond maximum rates provided by law.

2(1.1) In addition to the right under paragraph (1), a
3municipality may petition the court to <-increase the rate of a 
4local services tax and levy a payroll preparation tax as
5provided in subsection (d).

6(2) If a tax increase above existing limits is granted
7by the courts or a tax is approved as provided in subsection 
8(d), the increase shall be effective for a period of one
9year. The one-year increase shall run from the date specified
10in the petition filed with the court or, if no such date is
11specified, from the beginning of the current fiscal year of
12the municipality. Subsequent increases in rates of taxation
13or the imposition of a tax under subsection (d) may be
14granted by the court upon annual petition of the municipality
15until the termination date of the plan adopted by the 
16municipality under Chapter 2. The additional amount of taxes
17resulting from the petition shall not be subject to sharing
18with a school district.

19(3) A petition filed by a city of the second class A or 
20a home rule municipality that was previously a city of the 
21second class A under this subsection may not include an
22increase in a [tax<-] rate of taxation on nonresident income 
<-23that is greater than an increase in the rate of taxation, 
24over the highest rate levied in the previous fiscal year, on 
25resident income. A petition shall not include an increase in 
26a rate of taxation on nonresident income unless the
27municipality certifies to the court, with regard to those
28provisions of the plan having a measurable fiscal impact,
29that:

30(i) the municipality has substantially implemented

1the provisions which are within the authority of the
2chief executive officer or governing body, including, but
3not limited to, provisions of the plan that call for
4increasing existing tax rates levied on residents and
5increasing fees charged by the municipality;

6(ii) the municipality has taken those actions
7required to obtain the approval of other parties for
8those provisions which may not be implemented without
9such approval, including, but not limited to, the
10approval of a court, local electors or any collective
11bargaining unit; and

12(iii) the additional income from the aforementioned
13actions is insufficient to balance the municipal budget,
14necessitating additional revenue from an increase in the
15tax on nonresident income.

16(d) Additional tax options and limitations.--After a
17municipality has adopted a plan under Subchapter C or C.1 of
18Chapter 2 and with the approval of the court, it may adopt an
19ordinance imposing <-the following:

20(1) A local services tax pursuant to Chapter 3 of the
21act of December 31, 1965 (P.L.1257, No.511), known as The 
22Local Tax Enabling Act, at a rate not to exceed $156. A 
23municipality adopting an ordinance under this paragraph shall 
24be prohibited from imposing any additional tax on earned 
25income pursuant to subsection (c). A municipality levying the 
26local services tax at a rate in excess of $52 shall, by 
27ordinance, exempt any person from the local services tax 
28whose total earned income and net profits from all sources 
29within the municipality is less than $15,600 for the calendar 
30year in which the local services tax is levied. This
 

1paragraph does not apply to a municipality which, on the 
2effective date of this subsection, is not authorized to 
3petition the court of common pleas for the imposition of an 
4earned income tax on nonresidents.

<-5(2) a payroll preparation tax pursuant to section 303 of
<-6the act of December 31, 1965 (P.L.1257, No.511), known as The
7Local Tax Enabling Act. A municipality imposing a tax under
8this paragraph may levy a tax at a rate as provided in this
9section and as certified by the coordinator and approved by
10the court. When imposing a tax under this paragraph the
11municipality may impose the tax not to exceed a rate that is
12sufficient to produce revenues equal to revenues collected as
13a result of a business privilege tax and a mercantile tax
14under Chapter 3 of The Local Tax Enabling Act in the
15preceding fiscal year. <-After approval by the court of the tax
16at the rate as provided in this section, the municipality may
17levy the tax in any subsequent year without additional court
18approval, including any year after the termination of the
19municipality's distressed status, at a rate not to exceed
20that initially approved by the court. A municipality adopting
21a payroll preparation tax under this paragraph <-shall suspend
22the levy of <-may not levy a business privilege tax or
23mercantile tax <-until expiration of the payroll preparation
24tax authorized under this paragraph at which time the
25municipality may resume its levy of the business privilege
26tax or mercantile tax. The authority provided by this
27paragraph is limited to those municipalities levying a
28business privilege or mercantile tax, on a flat-rate or
29millage basis, in the year of the filing of a petition as
30provided in subsection (c).

<-1(e) Local services tax in municipalities subject to this act
2with distressed pension systems.--

3(1) A financially distressed municipality that has also
4received a determination that it has a financially distressed
5pension system under section 603 of the act of December 18,
61984 (P.L.1005, No.205), known as the Municipal Pension Plan
7Funding Standard and Recovery Act, may adopt an ordinance,
8without court approval, and as recommended in a plan adopted
9under Subchapter C or C.1 of Chapter 2, imposing a local
10services tax pursuant to Chapter 3 of The Local Tax Enabling
11Act at a rate not to exceed $156, or, in a tax year during
12which the income of nonresidents is subject to a tax above
13maximum rates as provided in section 607(f) of the Municipal
14Pension Plan Funding Standard and Recovery Act, a rate not to
15exceed $104. A municipality adopting an ordinance under this
16paragraph shall be prohibited from petitioning the court for
17an increase in the rate of taxation on the income of
18nonresidents under this section. A municipality levying the
19local services tax at a rate in excess of $52 shall, by
20ordinance, exempt any person from the local services tax
21whose total income and net profits from all sources within
22the municipality is less than $15,600 for the calendar year
23in which the local services tax is levied. In addition to the
24uses authorized by section 330 of The Local Tax Enabling Act,
25revenue derived from a rate in excess of $52 may only be used
26for municipal purposes as provided in the plan. <-This 
27paragraph does not apply to a municipality which, on the 
28effective date of this subsection, is not authorized to 
29petition the court of common pleas for the imposition of an 
30earned income tax on nonresidents.

1(2) A municipality that has levied a local services tax
2pursuant to paragraph (1) may continue to levy a local
3services tax at a rate in excess of $52 in accordance with
4paragraph (1) in any subsequent year, provided that a tax
5levied for any year after a termination of distressed status
6shall be authorized subject to all of the following:

7(i) A pension plan of the municipality has unfunded
8actuarial accrued pension liability.

9(ii) All revenue derived from that portion of the
10rate in excess of $52 shall be used solely to defray the
11municipality's unfunded actuarial accrued pension
12liability.

13(iii) The local services tax levied at a rate in
14excess of $52 may not be levied in the same year that the
15income of nonresidents is subject to a tax above maximum
16rates as provided in section 607(f) of the Municipal
17Pension Plan Funding Standard and Recovery Act.

18Section 141. Jurisdiction of court of common pleas.

19(a) Increases in tax rates.--The court of common pleas of
20each county shall have jurisdiction to hear a petition filed by
21a municipality which has adopted a [final] plan pursuant to
22Subchapter C or C.1 of Chapter 2 to increase rates of taxation
23for earned income on residents and nonresidents, real property,
24or both, beyond maximum rates provided by law in accordance with 
25section 123. The court may extend annually the increased taxing
26powers of the municipality until the termination date of the
27plan adopted by the municipality pursuant to Chapter 2.

<-28(a.1) Levy of payroll preparation tax.--The court of common
29pleas of each county shall have jurisdiction to hear a petition
30filed by a municipality which has adopted a plan pursuant to

1Subchapter C or C.1 of Chapter 2 to levy a payroll preparation
2tax authorized by section 123(c)(1.1).

3(a.2) Increase in local services tax.--The court of common
4pleas of each county shall have jurisdiction to hear a petition
5filed by a municipality which has adopted a plan pursuant to
6Subchapter C or C.1 of Chapter 2 to increase the rate of the
7local services tax in accordance with section 123(c)(1.1).

8(b) Involuntary compromises of delinquent taxes.--The court
9of common pleas of each county may hear a petition filed by at
10least two taxing authorities having taxing power over the
11properties within a municipality which has adopted a [final]
12plan pursuant to Subchapter C or C.1 of Chapter 2 if the
13petition requests a compromise of delinquent taxes due on a
14property in that municipality. The court may order the property
15to be sold at a sheriff's sale and the proceeds to be divided
16among all authorities which are owed taxes for the property
17sold. If the property is sold at sheriff's sale and if the
18proceeds are insufficient to satisfy tax liens on the property,
19the court shall order a proration of the sale proceeds among the
20taxing authorities which fixed the liens.

21Section 7. The act is amended by adding a chapter to read:

22CHAPTER 1-A

23EARLY INTERVENTION PROGRAM

24SUBCHAPTER A

25PRELIMINARY PROVISIONS

26Section 101-A. Definitions.

27The following words and phrases when used in this chapter
28shall have the meanings given them in this section unless the
29context clearly indicates otherwise:

30"Center." The Governor's Center for Local Government

1Services of the Department of Community and Economic Development
2of the Commonwealth.

3"Keystone Principles." The Keystone Principles and Criteria
4for Growth Investment and Resource Conservation adopted May 31,
52005, by the Economic Development Cabinet to foster and measure
6the effectiveness of sustainable economic development and
7conservation of resources through the investment of Commonwealth
8funds in its municipalities.

9"Program." The Early Intervention Program established by
10this chapter.

11Section 102-A. Program objectives.

12The Early Intervention Program established by this chapter
13provides a municipality with a preemptive step for the purpose
14of seeking guidance and assistance from the Commonwealth to
15develop long-term financial management, administrative, service
16delivery and economic development strategies that the
17municipality can implement to avert a fiscal crisis and provide
18fiscal stability. The specific objectives of the Early
19Intervention Program include the following and are meant to:

20(1) Provide the resources to assist a municipality in
21identifying, prioritizing and addressing the financial
22difficulties confronting it, while ensuring its short-term
23and long-term goals and objectives are adequately taken into
24account.

25(2) Engage in a management review of its operations and
26provide recommendations that will enhance financial
27administration, management and service delivery of a
28municipality.

29(3) Strengthen the ability of a municipality to develop,
30adopt, implement and monitor multiyear financial management

1plans and to incorporate the process into its annual budget
2process.

3(4) Implement a system of multiyear revenue and
4expenditure trend analysis, monitoring and forecasting so
5that a municipality can better anticipate and plan for future
6financial circumstances.

7(5) Promote multimunicipal and regional planning,
8cooperation strategies and cost-sharing opportunities between
9two or more municipalities.

10(6) Support the adoption by a municipality of best
11management practices and efficiency measures to increase the
12financial stability of a municipality.

13(7) Further the integration of sound community and
14economic development strategies to encourage the economic
15growth of the tax base of a municipality over a multiyear
16period.

17SUBCHAPTER B

18ADMINISTRATIVE PROVISIONS

19Section 103-A. Authorization.

20The Early Intervention Program is established to authorize
21the center to provide guidance and assistance through grants to
22a municipality seeking to ensure fiscal stability by developing
23and implementing long-term financial, managerial and economic
24development strategies.

25Section 104-A. Grants.

26(a) General rule.--A grant may be awarded by the center to a
27municipality or two or more municipalities cooperating together
28to ensure fiscal stability through the development and
29implementation of long-term financial, managerial and economic
30development strategies in an amount not exceeding $200,000

1during the first fiscal year that commences on the effective
2date of this section, adjusted for inflation in subsequent years
3by an amount not to exceed an annual cost-of-living adjustment
4calculated by applying the percentage change in the Consumer
5Price Index immediately prior to the date the adjustment is due
6to take effect. To be eligible for a grant for implementation
7funding, a municipality must meet the basic training
8requirements established in guidelines developed by the center.

9(b) Match.--The grant amount is subject to a 50% financial
10match by the municipality to which the grant was provided,
11unless the center determines a match by the municipality of a
12lesser amount not less than 10% is warranted. The center may
13authorize any portion of the municipality's financial match to
14be offset by an in-kind match.

15(c) Eligible activities.--A grant shall be used for the
16following eligible activities:

17(1) The development of multiyear financial management
18plan for a municipality.

19(2) The development of multimunicipal or regional
20intergovernmental cooperation initiatives and cost-sharing
21strategies.

22(3) A study to improve the management and operational
23practices and financial administration procedures of a
24municipality.

25(4) A merger or consolidation feasibility study.

26(5) The implementation of any of the eligible activities
27identified in paragraphs (1) through (4).

28(6) Training and capacity-building activities that meet
29basic requirements established in guidelines developed by the
30center which assist the municipality in the implementation of

1plan recommendations.

2(7) Contracts with professional consultants to develop
3and implement recommendations related to eligible activities.

<-4(8) An audit, prepared by an independent accountant or
5firm, as required by section 108-A.

6Section 105-A. Application.

7A program application must be submitted by the applicant
8municipality on a form prescribed by the department utilizing
9the electronic single application format and include or
10demonstrate all of the following:

11(1) The name and address of the municipality or, in the
12case of a multimunicipal application, the municipalities.

13(2) The name of a contact person.

14(3) The execution of a supporting resolution authorizing
15the submission of the application and committing the
16resources of the municipality or, in the case of a
17multimunicipal application, municipalities.

18(4) The single application shall be signed by the
19authorized officer of the municipality or, in the case of a
20multimunicipal application, municipalities.

21(5) Any other information required by the department.

22Section 106-A. Evaluation criteria.

23The center shall evaluate a program application on the basis
24of municipal financial characteristics and the quality of the
25proposed program, including the extent to which the program is
26estimated to improve the administrative, operational and
27financial management capacity of the applicant municipality. The
28following factors shall be considered in the evaluation:

29(1) The current and projected financial condition of the
30municipality.

1(2) The economic and demographic condition of the
2municipality.

3(3) The proactive measures the municipality has taken to
4manage its finances in a responsible manner, including
5attempts to reduce expenditures, increase revenues, adopt
6sound management practices, establish municipal priorities
7and adhere to generally accepted financial management, budget
8and financial reporting standards.

9(4) The extent to which the municipality has
10demonstrated its willingness and commitment to engage in a
11multimunicipal or regional strategy and has examined whether
12certain municipal services can be provided through a council
13of governments, a county government or other structure.

14(5) The extent to which the municipality has
15demonstrated its willingness and commitment to improve its
16financial and administrative operation through the adoption
17and implementation of a multiyear financial management plan.

18(6) Where it has received assistance and funding from
19the department, past performance by the municipality.

20(7) Where applicable, the elements of the Keystone
21Principles shall be included as part of the evaluation
22criteria.

23(8) Any other factors the center considers relevant.

24Section 107-A. Award.

25The secretary shall announce by letter applications selected
26for funding. The contact person specified in the application
27shall be sent the offer letter. All funding decisions shall be
28made subject to the availability of funds.

29Section 108-A. Guidelines.

30The department shall establish guidelines consistent with

1this chapter, particularly the program requirements and
2measurements to ensure a municipality is provided with adequate
3guidance. The program shall include a requirement of a financial
4audit of the municipality, prepared by an independent accountant
5or firm, for the fiscal year immediately preceding the
6application for funds under this chapter. The department may
7establish guidelines for the audit, and the requirement may be
8satisfied by any previous audit prepared in accordance with the
9guidelines.

10Section 8. Section 203(c) and (g) of the act, amended June
1130, 1992 (P.L.336, No.69), are amended to read:

12Section 203. Procedure for determination.

13* * *

14(c) Investigation.--After receiving the request but before
15the public hearing, the secretary may make an investigation into
16the financial affairs of the municipality. The results of the
17investigation or any study previously conducted by the
18department <-or with department funds under Chapter 1-A or section
19121 shall be placed in the record of the public hearing.

20* * *

21(g) Appeal.--A determination by the secretary under this 
22[act] section is appealable pursuant to [Title 2 of the 
23Pennsylvania Consolidated Statutes (relating to administrative 
24law and procedure)] 2 Pa.C.S. Ch. 7 Subch. A (relating to 
25judicial review of Commonwealth agency action).

26Section 9. Sections 221(d) and (e), 222 and 223 of the act
27are amended to read:

28Section 221. Designation.

29* * *

30(d) Duties.--The coordinator shall [prepare and administer a

1plan designed to relieve the financial distress of the
2municipality which he has been appointed to serve.]:

3(1) Present, at a public meeting within 45 days of the
4execution of the contract between the department and the
5coordinator, a list of the coordinator's preliminary
6findings, as to the financial condition of municipality. The
7list of findings shall include, but is not limited to, a
8quantification of all operating deficits for the current
9fiscal year and a projection of revenues and operating
10expenses for the next three fiscal years, all outstanding
11debt obligations, the cost and term of all outstanding
12contracts, and other relevant information.

13(2) Solicit, not later than the date of the
14coordinator's presentation described in paragraph (1),
15comments <-in writing relating to the issues associated with
16the municipality's distress from such persons and entities
17who:

18(i) have participated in the early intervention
19process;

20(ii) have provided consultation on behalf of the
21municipality relating to the issues associated with its
22distress; or

23(iii) are elected officials or employees of the
24municipality or labor organizations representing
25employees of the municipality.

26(3) Consider all comments submitted within 30 days of
27the coordinator's presentation described in paragraph (1)
28before preparing and administering a plan designed to relieve
29the financial distress of the municipality which the
30coordinator has been appointed to serve.

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

2(1) Apply for grants and loans pursuant to Chapter 3, as
3[he] the coordinator deems necessary.

4(2) Investigate the tax-exempt status of any property
5within a distressed municipality and advise the governing
6body of the municipality to appeal the assessment or exempt
7status of property within the distressed municipality.

8(3) Solicit and negotiate payments in lieu of taxes from
9institutions of public charity and other tax-exempt property
10owners in the municipality <-and recommend action by the 
11municipality.

12Section 222. Access to information.

13(a) General rule.--The coordinator shall have full access to
14all municipal records.

15(b) Enforcement where records in possession of official or 
16public employee.--If the coordinator believes that an official
17or employee of the municipality or an authority is not answering
18questions accurately or completely or is not furnishing
19information requested, the coordinator may notify the official
20or employee in writing to furnish answers to questions or to
21furnish documents or records, or both. If the official or
22employee refuses, the coordinator may seek a subpoena in the
23court of common pleas to compel testimony and furnish records
24and documents. An action in mandamus shall lie to enforce the
25provisions of this section.

26(c) Enforcement where records in possession of other
27persons.--If the coordinator believes that a person is not
28furnishing information related to municipal records and that
29person is not subject to subsection (b), the coordinator may
30seek a subpoena in the court of common pleas to compel testimony

1and furnish records and documents.

2Section 223. Public and private meetings.

3(a) Public meetings authorized.--The coordinator may hold
4public meetings as defined in [the act of July 3, 1986 (P.L.388, 
5No.84), known as the Sunshine Act] 65 Pa.C.S. Ch. 7 (relating to 
6open meetings), in connection with plan preparation.

7(b) Private meetings authorized.--Notwithstanding the
8provisions of [the Sunshine Act] 65 Pa.C.S. Ch. 7, private
9negotiation sessions may be conducted by the coordinator between
10the municipality and the individual creditors in an effort to
11obtain the consent of each creditor to the proposed adjustment
12and handling of specific claims against the municipality.

13Section 10. The act is amended by adding a section to read:

14Section 224.1. Performance of coordinator.

15(a) Review of coordinator.--Beginning on July 1, 2015, the
16secretary, or his designee, shall conduct an annual review of
17each coordinator appointed under section 221 to assess whether
<-18the coordinator's performance has been in compliance with the:

19(1) The coordinator's performance has been in compliance 
20with the requirements of the coordinator's contract, if any,
21and the provisions of this act.

<-22(2) The coordinator has been ineffective in providing
23assistance necessary to develop and implement the plan.

24(b) Termination of coordinator.--An unfavorable review under
25this section may constitute grounds for termination of the
26coordinator's contract <-for cause.

27Section 11. Section 241 of the act, amended or added June
2830, 1992 (P.L.336, No. 69) and July 5, 2012 (P.L.1104, No.133)
29and repealed in part October 13, 1994 (P.L.596, No.90), is
30amended to read:

1Section 241. Contents.

2A plan formulated by the appointed coordinator shall be
3consistent with applicable law and shall include any of the
4following factors which are relevant to alleviating the
5financially distressed status of the municipality:

6(1) Projections of revenues and expenditures for the
7current year and the next [three] five years, both assuming
8the continuation of present operations and as impacted by the
9measures in the plan. The projections must include an 
10itemization of the following:

11(i) Projected revenues, including:

12(A) Local taxes.

13(B) Licenses, permits and fines.

14(C) Sales and rentals.

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

16(E) Any other sources of projected revenue.

17(ii) Projected expenditures, including:

18(A) Debt service.

19(B) Workforce.

20(C) Elected and executive officials.

21(D) Financial management.

22(E) Infrastructure costs, including highways,
23roads and wastewater systems.

24(F) Maintenance costs, including recycling and
25trash collection, disposal and removal.

26(G) Other professional services.

27(H) Public safety.

28(I) Community and economic development.

29(J) Any other applicable expenditures.

30(2) Recommendations which will:

1(i) Satisfy judgments, past due accounts payable,
2and past due and payable payroll and fringe benefits.

3(ii) Eliminate deficits and deficit funds.

4(iii) Restore to special fund accounts money from
5those accounts that was used for purposes other than
6those specifically authorized.

7(iv) Balance the budget, avoid future deficits in
8funds and maintain current payments of payroll, [fringe]
9benefits and accounts through possible revenue
10enhancement recommendations, including tax or fee
11changes.

12(v) Avoid a fiscal emergency condition in the
13future.

14(vi) Enhance the ability of the municipality to
15negotiate new general obligation bonds, lease rental
16debt, funded debt and tax and revenue anticipation
17borrowing.

18(vii) Consider changes in accounting and automation
19procedures for the financial benefit of the municipality.

20(viii) Propose a reduction of debt due on specific
21claims by an amortized or lump-sum payment considered to
22be the most reasonable disposition of each claim possible
23for the municipality considering the totality of
24circumstances.

25(3) Possible changes in collective bargaining agreements
26and permanent and temporary staffing level changes or changes
27in organization.

28(4) Recommended changes in municipal ordinances or
29rules.

30(5) Recommendations for special audits or further

1studies.

2(6) An analysis of whether conditions set forth in
3section 261 exist, whether specific exclusive Federal
4remedies could help relieve the municipality's financial
5distress and whether filing a Federal debt adjustment action
6under Subchapter D is deemed to be appropriate.

7[(7) An analysis of whether the economic conditions of
8the municipality are so severe that it is reasonable to
9conclude that the municipality is no longer viable and should
10consolidate or merge with an adjacent municipality or
11municipalities.]

12(7.1) An analysis of whether the economic conditions
13within the municipality are so severe that it is no longer
14viable and should consolidate or merge with an adjacent
15municipality or municipalities in accordance with 53 Pa.C.S.
16Ch. 7 (relating to alteration of territory or corporate
17entity and dissolution) or disincorporate in accordance with
18Chapter 4.

19(8) An analysis of whether functional consolidation of
20or privatization of existing municipal services is
21appropriate and feasible and recommendations for where and
22how this could be done.

23(9) A capital budget which addresses infrastructure
24deficiencies.

25(10) Recommendations for greater use of Commonwealth
26economic and community development programs.

27(10.1) Recommendations for enhanced cooperation and
28changes in land use planning and zoning, including regional
29approaches that would promote economic development and
30improve residential, commercial and industrial use

1availability within and around the municipality.

2(11) Notwithstanding any other provision of law, limits
3on projected expenditures for individual collective
4bargaining units that may not be exceeded by the distressed
5municipality, giving due consideration to the projection of
6revenue and expenses under paragraph (1).

7(12) An analysis of current revenue sources and
8recommendation to modify revenue sources, including the
9subjects and rates of taxation of the distressed municipality
10in accordance with section 123. Recommendations relating to a
11modification of revenue sources shall be made with
12consideration to the effect on economic development,
13employment and an equitable distribution of tax burden. The
14analysis and recommendations shall be presented to the court
15in any proceeding under section 123. The analysis shall
16address:

17(i) The tax bases of current and recommended revenue
18sources from both within and outside of the distressed
19municipality.

20(ii) Collection rates, methods and costs of existing
21and, to the extent possible, proposed revenue sources<-,
22including code enforcement and tax collection.

23(iii) The current fee, charge, penalty and fine
24provisions of municipal enactments related to municipal
25services and police powers.

26(iv) Revenue as defined in section 103.

27Section 12. Section 242(a) of the act, amended December 19,
281988 (P.L.1272, No.157), is amended and the section is amended
29by adding a subsection to read:

30Section 242. Publication.

1(a) Filing.--Within [90] 120 days of an executed contract
2between the department and the coordinator, the coordinator
3shall formulate a plan for relieving the municipality's
4financial distress and shall deliver true and correct copies of
5it to:

6(1) The municipal clerk or municipal secretary, who
7shall immediately place the copy on file for public
8inspection in the municipal office.

9(2) The secretary.

10(3) Each member of the municipal governing body.

11(4) The mayor.

12(5) The chief financial officer of the municipality.

13(6) The solicitor of the municipal governing body.

14(7) All parties who have petitioned the secretary under
15section 203.

16* * *

17(c.1) Solicitation of comments.--The coordinator shall, no
18later than the date of filing, solicit comments on the
19coordinator's plan to be presented at the public meeting from
20such persons and entities which submitted timely comments under
21section 221(d)(2).

22* * *

23Section 13. Section 245 of the act, amended December 19,
241988 (P.L.1272, No.157), is amended to read:

25Section 245. Adoption by municipality.

26Not later than 25 days following the coordinator's public
27meeting, the municipal governing body shall either enact an
28ordinance approving the implementation of the plan, including
29enactment of necessary related ordinances and revisions to
30ordinances, or shall reject the plan and proceed under section

1246. If the ordinance takes effect in a municipality operating
2under an optional plan form of government or a home rule
3charter, the chief executive officer [may] shall issue an order
4directing the implementation of the plan no later than seven
5days from the enactment of the ordinance by the governing body.

6Section 14. Section 246(d)(3) of the act is amended to read:

7Section 246. Preparation and action on alternate plan.

8* * *

9(d) Review by secretary.--

10* * *

11(3) If the secretary is of the opinion that the plan,
12when implemented, will not overcome the municipality's
13financial problems, the secretary shall inform the
14municipality of the following:

15(i) The secretary's determination.

16(ii) The reasons for the determination.

17(iii) The applicability of sections 251 and 264 to
18the municipality.

19(iv) The applicability of Chapters 6 and 7 to the
20municipality.

21Section 15. Section 247(a)(4) of the act, amended June 30,
221992 (P.L.336, No.69), is amended to read:

23Section 247. Plan implementation.

24(a) Coordinator's plan.--If the coordinator's plan is
25adopted by the municipal governing body, the coordinator shall
26be charged with implementing his plan and shall:

27* * *

28(4) Terminate the plan upon its completion in accordance 
29with Subchapter C.1.

30* * *

1Section 16. The act is amended by adding a section to read:

2Section 247.1. Annual budget.

3(a) Proposed budget.--Notwithstanding any provision of law
4or home rule charter to the contrary, a municipality subject to
5a plan under this chapter shall, at least <-150 120 days prior to
6the end of its current fiscal year, commence development of a
7proposed annual budget for the next fiscal year that implements
8the provisions of the plan or makes other changes to the
9management of the municipality necessary to implement the
10provisions of the plan. The proposed budget shall be prepared by
11the governing body or the chief executive officer, as the case
12may be.

13(b) Coordinator review.--At least <-90 75 days prior to the
14end of the fiscal year, the governing body or chief executive
15officer shall submit the proposed budget to the coordinator. The
16coordinator shall review the proposed budget to verify that the
17proposed budget conforms with the plan. The coordinator shall
18make any modifications necessary to the proposed budget to meet
19the objectives of the plan.

20(c) Return of proposed budget.--After completion of the
21coordinator's review, the coordinator shall, at least 45 days
22before the end of the municipality's fiscal year, submit the
23proposed budget, together with the coordinator's modifications,
24if any, to the municipality for adoption in accordance with law.

25(d) Notification to secretary.--Within 30 days of the
26municipality's adoption of the budget, or the municipality's
27failure to timely adopt a budget, the coordinator shall notify
28the secretary whether or not the adopted budget, if any,
29conforms to the plan. Upon a determination that the budget does
30not conform to the plan, or that the municipality has not timely

1adopted a budget, the secretary may take action as provided for
2by this act.

3Section 17. Sections 248 and 250 of the act are amended to
4read:

5Section 248. Failure to adopt or implement plan.

6If no plan is adopted or implemented pursuant to this
7chapter, then sections 251 and 264 shall apply[.] and, upon a 
8written recommendation of the coordinator, the secretary may 
9request a determination of a fiscal emergency in accordance with 
10Chapter 6.

11Section 250. Debt provisions.

12Adoption of a plan in accordance with this subchapter and 
13Subchapter C.1 by ordinance is a condition precedent for the
14approval of long-term debt or funding debt under [the act of
15July 12, 1972 (P.L.781, No.185), known as the Local Government
16Unit Debt Act] 53 Pa.C.S. Pt. VII Subpt. B (relating to 
17indebtedness and borrowing). A debt financing provision of the
18plan may be waived by agreement of the lender and the
19municipality; but any such waiving must be expressly set forth
20in the indenture or contract securing the debt.

21Section 18. Section 253 of the act is repealed:

22[Section 253. Termination of status.

23(a) Determination by secretary.--Following a duly advertised
24public hearing with notices given as provided in section 203,
25the secretary may issue a determination that the conditions
26which led to the earlier determination of municipal financial
27distress are no longer present. The determination shall rescind
28the status of municipal financial distress and shall include a
29statement of facts as part of the final order.

30(b) Determination upon petition by a municipality.--A

1financially distressed municipality may petition the secretary
2to make a determination that the conditions which led to the
3earlier determination of municipal financial distress are no
4longer present. Upon receiving the petition, the secretary may
5issue a determination to rescind following a duly advertised
6public hearing with notices given as provided in section 203.

7(c) Factors to consider.--In determining whether the
8conditions which led to the earlier determination of municipal
9financial distress are no longer present, the secretary shall
10consider that:

11(1) Monthly reports submitted by the coordinator to the
12department under section 247(a)(3) indicate that termination
13of the status of municipal financial distress is appropriate.

14(2) Accrued deficits in the municipality have been
15eliminated.

16(3) Obligations issued to finance all or part of the
17municipality's deficit have been retired.

18(4) The municipality has operated, for a period of at
19least one year, under a positive current operating fund
20balance or equity, as evidenced by the municipality's audited
21financial statements prepared in accordance with generally
22accepted accounting principles.]

23Section 19. The act is amended by adding a subchapter to
24read:

25SUBCHAPTER C.1

26DURATION OF DISTRESSED STATUS

27Section 254. Limitation of status.

28(a) Termination date.--

29(1) Except as otherwise provided in this subchapter, no
30municipality shall be subject to the provisions of this act

1after five years from the effective date of an ordinance
2enacted in accordance with section 245 or 246. No amendment
3to a plan shall affect the termination date as determined
4from the date of enactment of the original ordinance.

5(2) Nothing in this section shall be construed to:

6(i) prohibit a municipality from participating in an
7early intervention program as provided in Chapter 1-A or
8reentering distressed status in accordance with this act
9after a termination of status in accordance with this
10subchapter.

11(ii) Prohibit termination of status proceedings in
12accordance with section 255.1 prior to the termination
13date as provided in this section.

14(b) Distressed municipalities.--

15(1) Municipalities operating pursuant to a recovery plan
16on the effective date of this section shall be subject to a
17termination date five years from the effective date of the
18most recent recovery plan or amendment enacted in accordance
19with this act, provided, however, that municipalities subject
20to a plan that will remain in effect for one year or less on
21the effective date of this subsection shall be subject to a
22termination date three years from the termination date of the
23current plan or plan amendment.

24(2) If its distressed status has not been rescinded or
25has been continued in accordance with section 710.1, a
26municipality operating under Chapter 7 shall be subject to a
27final termination date no more than five years from the
28termination date of receivership. Section 255 shall not apply
29to a termination of status under this paragraph.

30Section 255. Coordinator's report.

1(a) General rule.--Not later than 180 days after the
2beginning of the final year of distressed status as determined
3in accordance with section 254(a) and (b)(1), the coordinator
4shall <-prepare complete a report stating the financial condition
5of the municipality and include one of the following findings:

6(1) Conditions within the municipality warrant a
7termination in status in accordance with section 255.1. A
8report containing a recommendation under this paragraph shall
9address each of the factors set forth in section 255.1(c).

10(2) Conditions are such that the municipality should be
11disincorporated in accordance with Chapter 4.

12(3) Conditions are such that the secretary should
13request a determination of a fiscal emergency in accordance
14with Chapter 6.

15(4) A three-year exit plan in accordance with section
16256 is warranted.

17(b) Filing and notice.--

18(1) The report shall be filed with the same parties as
19provided in section 242(a). The date of filing shall be the
20date on which the municipal clerk or municipal secretary
21places a true and correct copy of the report on file for
22public inspection in the municipal office.

23(2) On the date of filing, notice that the report has
24been filed and is open for public inspection in the municipal
25office shall be published by the coordinator in the county
26legal reporter and in one or more newspapers with general
27circulation serving the area in which the municipality is
28located. The department shall pay for the cost of the
29publication of the notice. The notice shall contain the
30following information:

1(i) A statement that a report regarding the status
2of the municipality's financial distress was filed
3pursuant to this act.

4(ii) The date and place of filing.

5(iii) A statement that the public has 15 days from
6the date of filing in which to file written comments on
7the report.

8(iv) The name and address of the coordinator to whom
9written comments should be sent.

10(v) A summary of the report and findings of the
11coordinator.

12(vi) The date and place of a public meeting to
13receive comments on the report.

14(c) Written comments.--Written comments on the report may be
15filed with the coordinator. Written comments shall be made no
16later than 15 days after the date of filing. Written comments
17judged by the coordinator to have value to the plan may be used
18to develop a revised report.

19(d) Public meeting.--A meeting conducted by the coordinator
20in the municipality shall be set for a date not later than 20
21days after the date of filing the report. The coordinator shall
22request in writing that the chief executive officer, each member
23of the municipal governing body and the chief financial officer
24of the municipality be present at the coordinator's meeting.
25Comments on the plan shall be received by the coordinator at
26that time. The coordinator has the discretion whether to
27consider comments made on the report.

28(e) Revision of report.--

29(1) Nothing in this section shall be construed to
30preclude the coordinator from revising a report of his own

1initiative.

2(2) Neither the secretary nor the chief executive
3officer or the governing body, as appropriate, may revise the
4coordinator's report.

5(3) If the coordinator decides to revise the report, the
6coordinator shall consult with the secretary and either the
7chief executive officer or the governing body throughout the
8revision of the report and shall give consideration to
9comments they may propose.

10(4) A revised report shall be completed and delivered to
11each party cited in section 242(a) within ten days from the
12date of the coordinator's public meeting on the original
13report.

14Section 255.1. Termination of status.

15(a) Public hearing.--Within 30 days of the date for the
16filing of a final report containing a finding as provided in
17section 255(a)(1) the secretary shall conduct a public hearing,
18advertised with notices given as provided in section 203.

19(b) Determination.--Within 90 days of the conclusion of the
20public hearing, the secretary shall issue an administrative
21determination of whether the termination of status is
22appropriate and reasons for the determination. The determination
23shall include findings addressing each of the factors in
24subsection (c) and shall consider information provided in the
25report of the coordinator and any additional information
26received during the public hearing.

27(c) Factors to consider.--If the secretary concludes that
28substantial evidence supports an affirmative determination for
29each of the following factors, the determination shall be that
30distressed status will be rescinded. The secretary shall

1consider whether:

2(1) Operational deficits of the municipality have been
3eliminated and the financial condition of the municipality,
4as evidenced by audited financial statements prepared in
5accordance with generally accepted accounting principles and
6projections of future revenues and expenditures, demonstrates
7a reasonable probability of future balanced budgets absent
8participation in this act.

9(2) Obligations issued to finance the municipality's
10debt have been retired, reduced or reissued in a manner that
11has adequately refinanced outstanding principle and interest
12and has permitted timely debt service and reasonable
13probability of continued timely debt service absent
14participation in this act.

15(3) The municipality has negotiated and resolved all
16claims or judgments that would have placed the municipality
17in imminent jeopardy of financial default.

18(4) The reasonably projected revenues of the
19municipality are sufficient to fund ongoing necessary
20expenditures, including pension <-and debt obligations and the
21continuation or negotiation of collective bargaining
22agreements and the provision of municipal services.
23Projections of revenues shall include any anticipated tax or
24fee increases to fund ongoing expenditures for the first five
25years after a termination of distressed status.

26(d) Appeal.--<-A labor organization that is a party to a
27collective bargaining agreement with a financially distressed
28municipality and any other party withstanding under section 202
29may appeal the The determination of the secretary <-may be
30appealed pursuant to 2 Pa.C.S. Ch. 7 Subch. A (relating to

1judicial review of Commonwealth agency action)<-. by any of the
2following:

3(1) The governing body of the municipality.

4(2) A creditor of the municipality.

5(3) Ten percent of the number of electors of the
6municipality that voted at the last municipal election.

7(4) Ten percent of the beneficiaries of a pension fund
8of the municipality.

9(5) Ten percent of the employees of the municipality.

10(6) Trustees or paying agents of a municipal bond
11indenture.

12(7) Elected auditors, elected controllers or appointed
13independent auditors.

14(8) A trustee of the Municipal Pension Fund.

15(9) The chief executive officer of any city.

16(10) A labor organization that is a party to a
17collective bargaining agreement with the municipality.

18(e) Suspension of subsequent proceedings.--The coordinator
19and secretary shall not take any action under sections 256 and
20257 until a final decision is issued for any appeal under
21subsection (d) or (f). The duration of distressed status of the
22municipality shall be extended subject to subsequent action in
23accordance with section 257.

24(f) Action of the secretary preserved.--Except as otherwise
25provided in chapters 6 and 7, the secretary may, following a
26duly advertised public hearing with notices given as provided in
27section 203, at any time issue a determination as provided in
28this section upon written recommendation of the coordinator
29setting forth a discussion of each of the factors specified in
30subsection (c). The determination may be appealed in accordance

1with subsection (d).

2Section 256. Exit plan.

3(a) General rule.--If recommended in a final report under
4section 255, the coordinator shall within 90 days of the public
5meeting referred to in section 255 <-or the filing of the final 
6report under section 255(e)(4), whichever is later, prepare an
7exit plan for the municipality. The exit plan shall be subject
8to the same filing, notice, public meeting and revision
9procedures as specified in section 255.

10(b) Contents of exit plan.--The exit plan prepared by the
11coordinator shall contain such elements as may be necessary to
12ensure termination of distressed status after three years,
13including, but not limited to:

14(1) The sale, lease, conveyance, assignment or other use
15or disposition of the assets of the distressed municipality.

16(2) Functional consolidation of or privatization of
17existing municipal services.

18(3) The execution, approval, modification, rejection,
19renegotiation or termination of contracts or agreements of
20the distressed municipality, provided, however, that the
21provisions of section 252 shall apply to any exit plan
22adopted in accordance with this subchapter.

23(4) Changes in the form of municipal government or the
24configuration of elected or appointed municipal officials and
25employees as permitted by law.

26(c) Adoption of plan.--

27(1) Not later than 45 days following the coordinator's
28public meeting <-to hear comments on the exit plan, the
29municipal governing body shall enact an ordinance approving
30the implementation of the plan, including enactment of

1necessary related ordinances and revisions to ordinances.

2(2) If the ordinance takes effect in a municipality
3operating under an optional plan form of government or a home
4rule charter, the chief executive officer shall issue an
5order directing the implementation of the plan no later than
6seven days from the enactment of the ordinance by the
7governing body.

8(3) If the governing body fails to adopt and implement
9the plan, the secretary shall, upon a written determination
10by the coordinator, request that the Governor make a
11determination of a fiscal emergency in accordance with
12Chapter 6.

13(4) The requirements of this subsection shall be
14suspended if the coordinator first provides a recommendation
15to the secretary that the municipality should be
16disincorporated under Chapter 4.

17Section 257. Postreport procedures.

18(a) Five-year procedures.--The secretary shall, upon written
19recommendation from the coordinator and after filing a final
20report under section 255, take one of the following actions:

21(1) Terminate the distressed status of the municipality
22effective 90 days after a determination or final decision
23requiring termination of status as provided in section 255.1.

24(2) After filing a final report containing a
25recommendation under section 255(a)(2), terminate the
26distressed status of the municipality effective on the date
27of a final order establishing an unincorporated district
28under Chapter 4.

29(3) After filing a final report containing a
30recommendation under section 255(a)(3), request a

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

3(b) Exit plan procedures.--The secretary may, after the
4adoption of a plan under section 256(c) and upon written
5recommendation of the coordinator:

6(1) issue a determination in accordance with section
7255.1; or

8(2) request a determination of a fiscal emergency in
9accordance with Chapter 6.

10(c) Postexit plan procedures.--If three years have elapsed
11since the adoption of an exit plan without a recommendation as
12provided in subsection (b), the secretary shall terminate the
13distressed status of the municipality.

14Section 20. Section 261(a)(4) of the act, amended July 5, 
152012 (P.L.1104, No.133), is amended and the section is amended 
16by adding a subsection to read:

17Section 261. Filing municipal debt adjustment under Federal
18law.

19(a) [Authorization.--In the event one of the following
20conditions is present, a] General authorization.--A municipality
21is hereby authorized to apply to the department to file a
22municipal debt adjustment action pursuant to the Bankruptcy Code
23(11 U.S.C. § 101 et seq.), if at least one of the following 
24conditions is present:

25* * *

26[(4) A majority of the current or immediately preceding
27governing body of a municipality determined to be financially
28distressed has failed to adopt a plan or to carry out the
29recommendations of the coordinator pursuant to this act.]

30(a.1) Filing after determination of distress.--The

1municipality's authorization under subsection (a) shall continue
2after the issuance of a declaration of distress under section
3203, so long as the municipality is not in a state of fiscal
4emergency pursuant to a declaration under section 602. A
5municipality that is in a state of fiscal emergency shall not be
6authorized under subsection (a) to apply to the department to
7file a municipal debt adjustment.

8* * *

9Section 21. Section 281 of the act, added June 30, 1992
10(P.L.336, No.69), is amended to read:

11Section 281. Eligibility.

12If a municipality has been determined to be distressed under
13section 203(f) and is not subject to funding restrictions under
14section 251 or 264, it shall be eligible for economic and
15community development assistance as provided in section 282.
16Merger or consolidation [under Chapter 4] of a distressed
17municipality with a municipality may not be deemed to diminish
18the successor municipality's eligibility or priority status for
19economic assistance under this chapter.

20Section 22. Section 282(b) of the act, added June 30, 1992
21(P.L.336, No.69), is amended and the section is amended by
22adding a subsection to read:

23Section 282. Priority.

24* * *

25(b) Releases of funds.--Funds granted to a distressed
26municipality shall only be released upon concurrence by the
27coordinator or receiver that the program to be funded is
28consistent with efforts to alleviate the financially distressed
29status of the municipality as provided in this act.

30(b.1) Release of funds to unincorporated district.--Funds

1granted to an unincorporated district shall be released to the
2administrator in accordance with section 441.

3* * *

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

5CHAPTER 4

6[CONSOLIDATION OR MERGER OF] ECONOMICALLY NONVIABLE

7MUNICIPALITIES

8Section 24. Chapter 4 of the act is amended by adding
9subchapters to read:

10SUBCHAPTER C

11DISINCORPORATION OF NONVIABLE MUNICIPALITIES

12Section 431. Definitions

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

16"Administrator." A service district administrator appointed
17pursuant to section 434.

18"District." An unincorporated service district created by
19section 441.

20"District advisory committee." A service district advisory
21committee established by section 442.

22"Governing standards." Provisions within an essential
23services plan providing for certain conduct of residents and
24property owners as provided by section 436(c).

25"Municipality." A county, city, borough, incorporated town,
26township or home rule municipality that does not provide police
27service or fire service through its employees. The term does not
28include a city of the first class.

29"Restricted Account." An account established in the State
30Treasury as provided by section 445.1.

1Section 431.1. Determination of nonviability.

2(a) General rule.--Upon recommendation of a coordinator
3appointed under Chapter 2 or a receiver appointed under Chapter
47, the secretary shall consider whether all of the following
5conditions have been met in determining that a municipality is
6nonviable:

7(1) The municipality is unable to function as a general
8purpose unit of government to provide essential services to
9its residents and property owners.

10(2) The municipality has experienced such deteriorated
11economic conditions and a collapse of its tax base that all
12reasonable efforts to restore economic viability have failed.

13(3) Efforts to merge or consolidate the municipality
14with a neighboring municipality are unachievable or will not
15result in viability.

16(b) Notice and recommendation.--If the secretary determines
17that a municipality is nonviable under all of the conditions
18provided in subsection (a), the secretary shall provide notice
19to the governing body of the municipality of the secretary's
20determination and recommend that the municipality be
21disincorporated under this subchapter.

22Section 432. Procedure for disincorporation.

23(a) Ordinance.--Within 45 days of a determination of
24nonviability under section 431.1, the governing body may enact
25an ordinance, subject to review by the court of common pleas
26under section 433, that will initiate the disincorporation of
27the municipality. The ordinance shall be advertised as required
28by law but it may not become effective until the court has
29issued its decree under section 433.

30(b) Petition by electors.--If the governing body of the

1municipality fails to pass an ordinance authorized under
2subsection (a), then a petition signed by registered electors of
3the municipality comprising at least 51% of the number of
4electors voting for the office of Governor in the last
5gubernatorial general election may be submitted to the court
6within 60 days of the failure of the governing body to enact an
7ordinance as provided in subsection (a).

8Section 433. Judicial review of ordinance or petition.

9(a) Filing and notice.--Upon presentation to the court of
10the filing of an ordinance under section 432(a) or a petition
11under section 432(b), the court shall direct the prothonotary to
12give notice of the filing of the ordinance or petition in a
13newspaper of general circulation in the county where the
14municipality is located once a week for four consecutive weeks
15and once in the county legal journal, if any, during the four-
16week period. The notice shall provide the date the ordinance or
17petition was filed and specify that exceptions to the ordinance
18or petition may be filed within 45 days of the date of the
19filing of the ordinance or petition by any of the following:

20(1) the governing body of the municipality;

21(2) a taxpayer of the municipality;

22(3) any creditor or bondholder of the municipality; or

23(4) any collective bargaining unit or contractor of the
24municipality.

25(b) Notice of hearing.--No later than 60 days after the date
26of the filing of the ordinance or petition, the court shall
27conduct a hearing on the ordinance or petition and exceptions
28filed thereto. Notice of the hearing shall be provided by the
29court to those receiving notice under subsection (a) and to all
30other parties that have filed exceptions in accordance with

1subsection (a).

2(c) Hearing proceedings.--

3(1) The governing body of the municipality and all other
4individuals and entities which have filed exceptions under
5subsection (a) shall be parties to the proceedings and shall
6be entitled to present testimony or other evidence relevant
7to the nonviability of the municipality or relevant to
8exceptions timely filed, provided that the court, in its
9discretion, may consolidate testimony related to similar
10exceptions.

11(2) The coordinator or receiver, or another designee of
12the secretary, shall testify about the progress of the
13municipality under the adopted recovery plan under Chapter 2
14or plan adopted under Chapter 7 and render an opinion
15regarding the viability of the municipality.

16(3) The court may examine pertinent financial
17information and any audits prepared by a certified public
18accountant of the municipality and receive additional
19evidence relevant to the matter, including, but not limited
20to, evidence relating to:

21(i) The effect of disincorporation, including
22provisions for services that would be continued to be
23provided to residents and property owners of the proposed
24disincorporated area.

25(ii) Additional plans, proceedings or strategies
26that could ensure that the municipality remain viable.

27(iii) The effect of the disincorporation on any
28bonds, other obligations or agreements of the
29municipality.

30(d) Costs and fees.--Court costs and filing fees associated

1with proceedings under this subchapter shall be paid by the
2department.

3(e) Judicial decree.--

4(1) The court shall issue a decree approving the
5validity of the ordinance or granting the petition unless it
6finds, by clear and convincing evidence, that the
7municipality should continue to exist as a separate municipal
8corporation because of a reasonable expectation that the
9municipality is viable.

10(2) Upon issuance of the judicial decree, the department
11and governing body of the municipality shall engage in the
12duties required by this subchapter to prepare for
13disincorporation. The disincorporation shall take effect upon
14the execution of disincorporation under section 439.

15Section 433.1. Failure to initiate disincorporation.

16(a) Conditions prior to determination.--The secretary shall
17issue a determination under subsection (b) within 30 days of
18either:

19(1) the final day for filing a petition under section
20432(b), if judicial review under section 433 has not been
21initiated; or

22(2) a final adjudication pursuant to a hearing held
23under section 433 finding that the municipality should
24continue to exist as a separate municipal corporation because
25of a reasonable expectation that the municipality is viable.

26(b) Determination.--The secretary shall determine whether:

27(1) the recovery plan for the municipality shall remain
28in effect subject to the limitations of chapter 2, subchapter
29C.1 and, if the coordinator has previously issued a report
30pursuant to section 255, the secretary shall direct the

1coordinator to prepare an exit plan according to section 256;

2(2) the elected and appointed officials of the
3municipality have demonstrated a failure to adequately
4implement recovery measures and, if so, request a
5determination of a fiscal emergency in accordance with
6Chapter 6;

7(3) conditions within the municipality warrant a
8termination in status in accordance with section 255.1; or

9(4) conditions as set forth in section 261 exist and, if
10so, that the governing body should initiate proceedings for
11federal debt readjustment under Subchapter D of Chapter 2.

12Section 434. Service district administrator.

13(a) Appointment.--No later than 30 days following a decree
14of the court of common pleas under section 433(e), the secretary
15shall appoint a service district administrator. The
16administrator must have a minimum of five years' experience and
17demonstrable expertise in business, financial or State or local
18budgetary matters and be a resident of this Commonwealth for at
19least one year prior to appointment.

20(b) Compensation and expenses.--The administrator's
21compensation and reimbursement for actual and necessary expenses
22shall be paid by the Commonwealth. The date and amount of
23compensation shall be established by the secretary. The
24department may require the compensation and expenses of the
25administrator to be reimbursed by an assessment for
26administrative costs under Subchapter D.

27(c) Revocation and vacancy.--The secretary may the elected
28and appointed officials of the revoke the appointment of an
29administrator at any time. A vacancy in the office of the
30administrator by way of revocation or resignation shall be

1filled in the same manner as the original appointment.

2(d) Prohibitions.--An administrator may not:

3(1) Seek or hold a position as any other elected or
4appointed public official within this Commonwealth or as a
5political party officer during the term of the
6administrator's tenure.

7(2) Seek election as a public official or political
8party officer for one year after the person's service as
9administrator has ended.

10(3) Engage in any conduct prohibited by the act of July
1119, 1957 (P.L.1017, No.451), known as the State Adverse
12Interest Act, or 65 Pa.C.S. Ch. 11 (relating to ethics
13standards and financial disclosure).

14(e) Liability.--

15(1) The administrator shall not be liable personally for
16any obligations of the municipality or unincorporated service
17district.

18(2) It is declared to be the intent of the General
19Assembly that the administrator shall enjoy sovereign and
20official immunity as provided in 1 Pa.C.S. § 2310 (relating
21to sovereign immunity reaffirmed; specific waiver) and shall
22remain immune from suit except as provided by and subject to
23the provisions of 42 Pa.C.S. Ch. 85 Subchs. A (relating to
24general provisions) and B (relating to actions against
25Commonwealth parties).

26(f) Powers and duties.--Notwithstanding any other provision
27of law, the administrator shall have the following powers and
28duties:

29(1) To require the municipality to take actions
30necessary for disincorporation under section 439, including:

1(i) The sale, conveyance, assignment or other use or
2disposition of the municipality's assets as provided by
3law.

4(ii) The repayment of debt, bonds or other
5obligations before disincorporation.

6(iii) Any other action necessary to implement the
7disincorporation.

8(2) To seek a writ of mandamus against the governing
9body to carry out this subchapter.

10(3) To identify essential services which should be
11provided to the residents and property owners of the district
12after the municipality is disincorporated.

13(4) To approve, disapprove, modify, reject, terminate or
14renegotiate contracts and agreements to provide services to
15the residents and property owners of the district.

16(5) To deposit all funds collected to administer
17Subchapter D in the municipality's restricted account and to
18requisition moneys from the restricted account.

19(6) To apply for grants, loans or payments under any
20economic and community development program funded by the
21Commonwealth.

22(7) To establish fees which may be assessed to fund
23essential services provided by contract or intergovernmental
24cooperation agreements under Subchapter D.

25(8) To meet and consult with the municipal governing
26body before disincorporation and the district advisory
27committee after the establishment of the district.

28(9) To meet and consult with county officials to
29prevent, abate and mediate blight as permissible by law.

30(10) To contract for professional services to aid in the

1administrator's duties under this subchapter and Subchapter
2D.

3(11) To seek enforcement of any provision of this
4subchapter and Subchapter D.

5(12) To seek invalidation of any act by the governing
6body of the municipality in conflict with the administrator's
7essential services plan.

8Section 435. Powers and duties of municipality.

9(a) General rule.--After the review of the court of common
10pleas resulting in a decree under section 433(e), but not less
11than 30 days before the date set by the administrator for
12disincorporation to take effect, the governing body of the
13municipality shall:

14(1) Enact a budget in the municipality's projected final
15year that funds the municipality's functions until the date
16of disincorporation and provides for the payment of every
17current obligation of the municipality before the date of
18disincorporation. All remaining municipal funds as of the
19date of disincorporation shall be transferred to the
20municipality's restricted account.

21(2) Provide for the transfer and administration of any
22municipal pension obligation to a private or public pension
23fund. Nothing in this paragraph shall be construed to
24authorize a modification of the pension benefits due to any
25current or past employee of the municipality.

26(3) Provide for the appointment of the district advisory
27committee to assist the administrator after the
28disincorporation of the municipality.

29(b) Corporate powers reserved.--After the review of the
30court of common pleas resulting in a decree under section 433(e)

1until the date of disincorporation, the governing body shall
2retain all corporate powers otherwise authorized by law, except
3that it shall not take any action inconsistent with the
4administrator's plan for disincorporation.

5(c) Establishment of governing standards for district.--

6(1) The governing body of the municipality may adopt
7recommended governing standards which may be included by the
8administrator in the essential services plan as the governing
9standards of the district.

10(2) If the governing body adopts recommended governing
11standards, the following shall apply:

12(i) No later than 30 days following a decree of the
13court of common pleas under section 433(e), the governing
14body shall provide written notice to the administrator
15that the governing body intends to adopt an ordinance
16containing recommended governing standards for the
17inclusion in the essential services plan.

18(ii) No later than 60 days following the notice
19provided under subparagraph (i), the governing body shall
20adopt an ordinance containing recommended governing
21standards for inclusion in the essential services plan.
22The ordinance may incorporate, by reference, any
23previously enacted ordinance of the municipality.

24(d) Powers of district advisory committee authorized.--After
25the review of the court of common pleas resulting in a decree
26under section 433(e) but prior to the date of disincorporation,
27in addition to the powers provided for under this subchapter,
28the governing body of the municipality may advise the
29administrator in the manner provided for the district advisory
30committee under Subchapter D in the formation and amendment of

1the essential services plan.

2Section 436. Essential services plan.

3(a) Formation.--The administrator shall, within 90 days
4following appointment and in consultation with the department,
5develop an essential services plan to provide essential services
6after the date of disincorporation. The essential services plan
7shall provide for:

8(1) Negotiation of contracts for the provision of vital
9and necessary services, not otherwise provided by an
10authority, as defined under Chapters 6 and 7. If the
11municipality participates in a regional police or fire
12department through an intergovernmental cooperation
13agreement, the essential services plan may provide for
14continued service from that regional department by contract
15or by renegotiating the intergovernmental cooperation
16agreement.

17(2) Local emergency management in accordance with the
18plan and program of the Pennsylvania Emergency Management
19Agency. The administrator shall consult with the emergency
20management organization of the county where the district is
21located to develop a plan which serves the district in a
22substantially similar manner as plans required for a
23political subdivision under 35 Pa.C.S. Ch. 75 Subch. A
24(relating to general provisions). The plan shall include a
25procedure for a declaration of a disaster emergency to be
26made in the district and the designation of a local
27coordinator of emergency management. The administrator is
28authorized to negotiate any contracts which are necessary to
29provide for the execution of a plan formed under this
30paragraph.

1(3) Payment of the lawful financial obligations of the
2unincorporated service district, including any transferred
3current obligation of the municipality and service of any
4debt incurred by the municipality in the manner provided by
5Subchapter D, after the disincorporation of the municipality.

6(4) Assessment of fees as provided by Subchapter D.

7(5) Disposition of all municipal property by sale, lease
8or conveyance for any of the following purposes:

9(i) Payment of outstanding debt obligations.

10(ii) Provision of services by an entity contracting
11with the unincorporated service district.

12(iii) Possession of title by the Commonwealth as
13provided by Subchapter D.

14(6) Termination of all contracts with the municipality.

15(7) Administration of the unincorporated service
16district, which may include reimbursement to the department
17for the compensation of the administrator.

18(8) Establishment of the date of disincorporation of the
19municipality as provided for by section 439.

20(9) Establishment of the name of the district. A
21district established by this act shall be named "The
22Unincorporated District of ........................."

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

24(1) Provide for the levy of any taxes.

25(2) Terminate an obligation to repay any debt, except
26that the plan may designate the unincorporated service
27district as the servicer of a debt and may specify that a
28debt secured by the collection of taxes shall be secured by
29the assessment of fees sufficient to satisfy the service
30obligations of the debt.

1(3) Assess and collect a higher amount of fees in the
2district's first full calendar year totaling 5% more than the
3total taxes levied in the municipality's final year before
4disincorporation.

5(4) Authorize the incurrence of any debt by the
6district, except as provided under section 441(k).

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

8(1) The essential services plan shall provide for
9governing standards, which standards shall include:

10(i) Rules and conduct related to the maintenance of
11property, conduct in public places and the parking of
12vehicles in public places which shall protect the health,
13safety and welfare of the residents and property owners
14of the district to the extent such rules and conduct
15could have been adopted by the municipality by ordinance.

16(ii) Fines and other relief which may be granted by
17a court presiding over a civil action brought for a
18violation of the governing standards.

19(2) If the governing body of the municipality adopts
20recommended governing standards as provided in section
21435(c), the administrator shall include the recommended
22governing standards in the essential services plan unless the
23administrator finds that the recommended governing standards
24are unlawful, unconstitutional or would substantially impede
25the administration of the essential services plan.

26Section 437. Proposed essential services plan.

27(a) Filing.--Within 90 days of the appointment of the
28administrator, the administrator shall deliver true and correct
29copies of the proposed essential services plan 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 chief executive officer of the municipality.

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

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

8(b) Date of filing.--For purposes of this section, the date
9of filing the proposed essential services plan shall be the date
10on which the municipal clerk or municipal secretary places a
11true and correct copy of the proposed essential services plan on
12file for public inspection in the municipal office.

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

14(1) On the date of filing, notice that a proposed
15essential services plan has been filed and is open for public
16inspection in the municipal office shall be published by the
17administrator in the county legal reporter and in one or more
18newspapers with general circulation serving the area in which
19the municipality is located. The cost for publishing the
20notice shall be borne by the department. The notice shall
21contain the following:

22(i) A statement that a proposed essential services
23plan has been filed regarding the provision of essential
24services to the residents and property owners of the
25unincorporated service district which shall succeed the
26municipality after disincorporation.

27(ii) The date and place of filing.

28(iii) A statement that the public has 15 days from
29the date of filing in which to file written comments
30relating to the proposed essential services plan.

1(iv) The name and address of the administrator to
2whom written comments should be sent.

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

4(2) Notice of an administrator's public meeting on the
5proposed essential services plan shall be published by the
6administrator in the county legal reporter and in one or more
7newspapers with general circulation serving the area in which
8the municipality is located. The department shall bear the
9cost for publishing the notice. The notice shall contain the
10following:

11(i) A statement that the purpose of the
12administrator's public meeting is to receive public
13comments on the proposed essential services plan.

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

15(3) The administrator may combine the publication of the
16notice that a proposed essential services plan has been filed
17with the publication of the notice of the public meeting.

18(d) Comment period.--Written comments on the proposed
19essential services plan may be filed with the administrator.
20Written comments shall be made no later than 15 days after the
21date of filing. Written comments judged by the administrator to
22have value to the proposed essential services plan may be used
23to develop revisions for a final essential services plan.

24(e) Administrator's public meeting.--A meeting conducted by
25the administrator in the municipality shall be set for a date no
26later than 20 days after the date of filing the proposed
27essential services plan. The administrator shall request in
28writing that the chief executive officer, each member of the
29municipal governing body and the chief financial officer of the
30municipality to be present at the service administrator's

1meeting. At that meeting, the administrator shall:

2(1) Present a summary of the proposed essential services
3plan.

4(2) Receive public comment on the proposed essential
5services plan.

6(3) Allow the members of the governing body of the
7municipality to present written and oral comments requesting
8revisions of the proposed essential services plan.

9Section 438. Final essential services plan.

10(a) Amendment of plan.--

11(1) The administrator shall consider all timely
12submitted written comments, comments presented at the public
13meeting and requests for revision in the amendment of the
14publicly presented proposed essential services plan before
15publishing a final essential services plan.

16(2) In the event that the administrator does not
17incorporate the requests for revision by the members of the
18governing body of the municipality regarding the levels of
19services provided under the proposed essential services plan
20or the basis for the calculation of fees assessed under the
21proposed essential services plan, the administrator shall
22state in the proposed essential services plan why the
23requested revisions were not feasible to incorporate in the
24final essential services plan.

25(b) Notice of final essential services plan.--Within 45 days
26of the public meeting the administrator shall file the final
27essential services plan with the persons listed in section
28437(a) and provide notice of the publication of the final
29essential services plan in the manner provided in section
30437(c)(1)(i), (ii) and (v).

1(c) Appeal.--

2(1) Any person aggrieved by the final essential services
3plan may appeal the plan to the court of common pleas within
430 days of notice of the filing of the final essential
5services plan. For purposes of this section, notice shall
6constitute the date that the person received actual notice of
7the final essential services plan, or the date that notice of
8the filing of the final essential services plan is first
9published in a newspaper with general circulation serving the
10area in which the municipality is located.

11(2) No appeal of a final essential services plan shall
12constitute an automatic stay of the essential services plan.

13(3) The appeal shall be sustained only where the court
14finds that the final essential services plan is unlawful or
15unconstitutional, or the conduct of the administrator is
16arbitrary or capricious.

17Section 439. Disincorporation of municipality.

18(a) Effects of disincorporation.--On the date of
19disincorporation, the following shall occur:

20(1) Notwithstanding any other provision of law, the
21terms of office of all elected officials of the municipality
22shall end and no person shall be elected or appointed to fill
23any vacancy of office.

24(2) All ordinances of the municipality shall be
25nullified.

26(3) All corporate powers granted to the municipality
27under its charter, municipal code or any other provision of
28law shall terminate.

29(4) The municipality shall be deemed by operation of law
30to be disincorporated. The area formerly contained within the

1municipality shall be an unincorporated service district as
2provided under Subchapter D.

3(b) Duties of administrator.--On or before the date of
4disincorporation, the administrator shall:

5(1) Execute all contracts for the provision of services
6and otherwise implement the essential services plan, which
7shall take effect on the date of disincorporation.

8(2) Provide notice of assessments to the property owners
9of the unincorporated service district according to the
10procedure provided in section 443(b) which may be a partial
11year assessment as provided by section 443(e).

12(3) Provide notice to the Governor and all Commonwealth
13agencies that the municipality has been disincorporated and
14the date of disincorporation.

15(c) Duties of county.--Effective on the date of
16disincorporation, notwithstanding any other provision of law,
17the county in which the municipality is located shall:

18(1) Adopt a zoning ordinance which applies to the
19unincorporated service district and adopts the substantive
20provisions of the municipality's zoning ordinance, if any, as
21it was in effect before nullification by subsection (a)(2).

22(2) Adopt an official map for the unincorporated service
23district which adopts the substance of the municipality's
24official map, if any, as it was in effect before
25nullification by subsection (a)(2).

26(3) Unless the county has adopted a subdivision and land
27development ordinance prior to the date of disincorporation
28of the municipality, adopt a subdivision and land development
29ordinance which shall apply to any unincorporated service
30district within the county.

1(4) Provide for the administration of the zoning
2ordinance and the subdivision and land development ordinance
3as they apply to the unincorporated service district and any
4other provisions of the act of July 31, 1968 (P.L.805,
5No.247), known as the Pennsylvania Municipalities Planning
6Code, that may be applicable.

7(5) Amend the county's comprehensive plan to the extent
8necessary to be consistent with the requirements of this
9subsection.

10(d) Property succession.--Immediately following
11disincorporation the area formerly contained within the
12municipality shall, by operation of law, be deemed an
13unincorporated service district under Subchapter D, the
14Commonwealth shall succeed in title to all property, including
15all real property, personal property and moneys in any municipal
16account, of the disincorporated municipality to be held in trust
17for the benefit of the residents and property owners of the
18unincorporated service district as provided under Subchapter D.

19SUBCHAPTER D

20UNINCORPORATED SERVICE DISTRICT

21Section 441. Establishment of unincorporated service district.

22(a) General rule.--The area formerly contained within a
23municipality shall, after disincorporation under Subchapter C,
24become an unincorporated service district. The district shall be
25an entity of the Commonwealth established for the special
26purpose of providing essential services to the citizens living
27within the district until such time as the district is
28incorporated as a municipality or made a part of a merged or
29consolidated with an existing municipality under section 447.

30(b) Authorized administrative authority.--All powers

1providing for the administration of the district shall be vested
2in the department through the administrator as provided in this
3subchapter. The district advisory committee shall not possess
4the corporate powers of the governing body of any municipality
5or any authority, except as provided by this subchapter.

6(c) Corporate powers prohibited.--Nothing in this subchapter
7shall be construed as authorizing the district to exercise
8corporate powers for the administration of a local government,
9including the power to levy taxes, establish elected or
10appointed offices and purchase, sell or convey property, except
11that the residents of the district may incorporate a
12municipality or merge or consolidate with an existing
13municipality as provided for in section 447.

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

15(1) All assets not sold by the municipality during the
16process of its disincorporation shall be conveyed to the
17Commonwealth to be held in trust for the benefit of the
18residents and property owners of the district.

19(2) The administrator shall serve as trustee of the
20property and provide for the repair and maintenance of all
21real property and roadways held in trust for the benefit of
22the residents and property owners of the district through the
23collection of assessments under this subchapter and
24administration of payments distributed to the district as
25provided in subsection (f).

26(3) Nothing in this subsection shall be construed as
27providing the express approval of the General Assembly to
28dispose of or use any lands acquired with funds under the act
29of June 22, 1964 (Sp.Sess., P.L.131, No.8), known as the
30Project 70 Land Acquisition and Borrowing Act, for purposes

1other than those provided by that act, except that the
2Commonwealth may succeed in title of the property for the
3limited purposes established by this subsection.

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

5(1) All debt incurred by the municipality before the
6establishment of the district shall be held by the district
7for administration by the administrator. Any such debt shall
8be secured by the assets conveyed to the Commonwealth and
9held in trust under subsection (d) and serviced by fees
10collected under this subchapter.

11(2) Nothing in this section shall be construed to
12authorize the Commonwealth to guarantee any debt incurred by
13a municipality or district with the full faith and credit of
14the Commonwealth, revenues from the General Fund or any other
15source of revenue not derived from fees assessed for the
16administration of this subchapter or gains from the sale of
17assets of the former municipality.

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

19(1) A district shall be eligible to receive any
20financial grant, loan or payment and participate in any
21program for which it was eligible when it was a municipality,
22including, but not limited to, <-emergency grants and loans 
23under Chapter 3, payments distributed pursuant to the act of
24June 1, 1956 (1955 P.L.1944, No.655), referred to as the
25Liquid Fuels Tax Municipal Allocation Law, all programs
26administered by the Pennsylvania Infrastructure Investment
27Authority and all economic and community development programs
28funded by the Commonwealth.

29(2) A district shall continue to receive priority in all
30economic and community development programs funded by the

1Commonwealth as provided for by Subchapter E of Chapter 2.

2(3) The administrator may apply for and shall manage any
3funds distributed to the district pursuant to this section.

4(g) Credit for fees assessed.--The payment of fees under
5this subchapter by a resident of a district shall constitute a
6credit against the collection of any income tax by a
7municipality on nonresidents, if applicable.

8(h) Relationship with existing municipal and other
9authorities preserved.--

10(1) All authorities established to provide services to
11the residents and property owners of a municipality prior to
12disincorporation shall continue to serve the residents and
13property owners of a district, and all members of the
14authority appointed by the governing body of the municipality
15prior to disincorporation shall continue to serve out the
16remainder of the members' terms.

17(2) Notwithstanding the provisions of 53 Pa.C.S. § 5607
18(relating to purposes and powers) or any other provision of
19law, subsequent appointments to the authority board which
20would otherwise be made by the governing body of the
21municipality shall be made by the administrator in
22consultation with the district advisory committee.

23(i) Governing standards enforceable.--

24(1) The governing standards included in the essential
25services plan shall be enforceable by the filing of a civil
26action by the administrator or any aggrieved property owner
27or resident of the district.

28(2) A violation of the governing standards shall
29constitute a public nuisance.

30(3) A magisterial district court or another court of

1competent jurisdiction presiding over a civil action brought
2under this subsection may find relief for the filing party
3according to the relief provided for in the essential
4services plan or any other relief which is available by law
5for the abatement of a public nuisance.

6(j) Pennsylvania Construction Code applicable.--

7(1) The act of November 10, 1999 (P.L.491, No.45), known
8as the Pennsylvania Construction Code Act, shall apply to all
9construction, alteration, repair and occupancy of all
10buildings within the district as though the district were a
11municipality which opted not to adopt the uniform
12construction code by ordinance.

13(2) The administrator shall receive any application for
14a construction permit and provide appropriate notices to an
15applicant of a construction permit and the Department of
16Labor and Industry as provided under section 501(e) of the
17Pennsylvania Construction Code Act.

18(k) Incurrence of debt limited.--The district shall not
19incur debts not provided for in subsection (e), except that the
20administrator may utilize such mechanisms as are necessary to
21incur temporary debts, or make purchases on credit, on behalf of
22and for the limited purpose of managing the cash flow for the
23district. All obligations incurred under this subsection shall
24be satisfied in full within one year and secured only by the
25anticipation of the collection of assessments under section 443.

26Section 442. Service district advisory committee.

27(a) Establishment.--Each service district shall establish a
28service district advisory committee.

29(b) Composition.--The district advisory committee shall be
30composed of three persons who are at least 18 years of age,

1including two resident property owners of the district and one
2owner of a business within the district, if any, who may or may
3not be a resident of the district.

4(c) Appointment by governing body.--At least 30 days prior
5to the date of disincorporation, the governing body of the
6former municipality shall appoint three members of the district
7advisory committee. The governing body shall designate that one
8appointee serve a term of one year, one appointee serve a term
9of two years and one appointee serve a term of three years.

10(d) Vacancy.--At the expiration of the term of a member of
11the district advisory committee, the remaining members of the
12committee shall appoint a person to fill the vacancy. In the
13event that the remaining members of the committee are unable to
14agree on a person to fill the vacancy or there is more than one
15vacancy, the administrator shall select a person or persons to
16fill the vacancy. All persons appointed to fill a vacancy on the
17district advisory committee shall have a term of three years
18beginning on the date of appointment.

19(e) Advise administrator.--The district advisory committee
20shall, at least once every three months, meet with the
21administrator and may make recommendations to the administrator
22for revisions to the essential services plan, including
23revisions to the levels of services provided to the residents
24and property owners of the district and methodology of rate
25calculation. The administrator shall consider all
26recommendations of the district advisory committee.

27(f) Advise county on land use issues.--The district advisory
28committee may provide recommendations on behalf of the residents
29and property owners of the district to any county official
30regarding any land use-related matter.

1(g) Advise department on incorporation.--The district
2advisory committee may provide recommendations to the department
3at any time that the residents of the district and the
4department consider the feasibility of incorporating as a viable
5municipality or merger or consolidation with an existing
6municipality.

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

8(1) Amendments to the governing standards may be
9recommended by a majority vote of the district advisory
10committee or by a petition signed by registered electors of
11the municipality comprising at least 10% of the number of
12electors voting for the office of Governor in the last
13gubernatorial general election.

14(2) Upon receipt of a recommendation made under this
15subsection, the administrator shall include the recommended
16amendments to the governing standard as a proposed plan
17amendment under section 444, unless the administrator finds
18that the recommended amendment of the governing standards is
19unlawful, unconstitutional or would substantially impede the
20administration of the essential services plan.

21(i) Restrictions.--The district advisory committee shall
22have no authority to act as a municipal governing body.

23(j) Open meetings.--The district advisory committee shall be
24an agency for purposes of the open meeting provisions of 65
25Pa.C.S. Ch.7 (relating to open meetings).

26Section 443. Assessments.

27(a) Authority to assess.--The administrator may establish
28assessments on a front foot or benefit-conferred basis, or a
29combination of both, on all real property within the district to
30provide for:

1(1) The cost of all essential services provided to the
2district.

3(2) The service of all debts held in trust by the
4Commonwealth which were incurred by the former municipality
5prior to disincorporation.

6(3) The necessary construction, maintenance or repair of
7facilities or properties which have been conveyed to the
8Commonwealth and are held in trust for the benefit of the
9district.

10(4) Reimbursement to the department of its reasonable
11costs of administration of the district, including, but not
12limited to, the compensation of the administrator and the
13collection of assessments authorized under this section.

14(5) Other costs incurred by the district or
15administrator in the execution of this subchapter, including
16a reserve of no more than 15% of the annual estimated costs
17of the essential services plan in the restricted account
18established in section 445 to provide for the provision of
19unforeseeable costs.

20(b) Establishment of assessment.--

21(1) No later than October 1 of the year preceding the
22year for which the assessment applies, the administrator
23shall establish a schedule of assessment for all real
24property within the unincorporated district.

25(2) The administrator shall provide written personal
26notice to each property owner of each property of the
27assessment due for the ensuing year no later than November 1
28of the year preceding the year for which the assessment
29applies.

30(3) As used in this subsection, "personal notice" shall

1mean and include notice upon the owner of a property either
2by personal service upon the owner or by certified mail to
3the owner at the owner's last known address or where service,
4after a reasonable attempt, shall not have been successfully
5made by either of these two methods, then by leaving notice
6at or upon the property.

7(c) Appeal of assessment.--Any person wishing to challenge
8the reasonableness of the assessment may file a suit in the
9court of common pleas within 30 days of receiving the notice
10provided in subsection (b).

11(d) Payment of assessments.--Payment of the assessment in
12full shall be due no later than March 1, unless the
13administrator has provided for installment payments in
14accordance with subsection (e).

15(e) Installments.--The administrator may provide for the
16payment of assessments by equal installments on a quarterly or
17semiannual basis as follows:

18(1) The administrator shall provide written personal
19notice of the installment plan to owners containing the date
20installments are due, interest and prepayment.

21(2) The rate of interest for the installments shall be
22established by the administrator at a rate of 6% per year.

23(3) If any of the installments remain unpaid for 60 days
24after the same has become due and payable, the entire unpaid
25assessment, plus unpaid accrued interest and any costs, shall
26be due and payable and the administrator shall proceed to
27collect the assessment due as provided in subsection (g).

28(4) A property owner upon whom an assessment has been
29made may pay all or as many of the installments before the
30same are due, with interest and costs to the due date of the

1next installment.

2(f) First year assessment.--The administrator may provide
3for a partial assessment for the calendar year in which the
4disincorporation of the municipality occurs. The due date for a
5partial year assessment and installment schedule may be set by
6the administrator, provided that no assessment shall be due
7sooner than 60 days after the administrator provides written
8personal notice of the assessment under the procedure in
9subsection (a).

10(g) Delinquent assessments.--Assessments remaining unpaid on
11December 31 of the year in which they are due shall be
12delinquent and subject to interest at a rate of 10% per year
13from the date of filing as a lien in accordance with the act of
14May 16, 1923 (P.L.207, No.153), referred to as the Municipal
15Claim and Tax Lien Law.

16(h) Liens.--An assessment, together with all charges,
17expenses and fees, including reasonable attorney fees necessary
18for its collection, shall be a lien upon the real property
19benefited. The lien shall have the same priority and may be
20collected in the same manner as a municipal lien in accordance
21with the Municipal Claim and Tax Lien Law or through a civil
22action initiated by the administrator.

23(i) Limited assessment of public property.--An assessment
24under this section on property held by the Federal Government,
25the Commonwealth and any other public property shall be limited
26to an assessment for those services which are directly consumed
27by the property, including, but not limited to, water service,
28sewer service and waste collection.

29Section 444. Amendment of essential services plan.

30(a) Periodic review.--No less than once per year, the

1administrator shall meet with the district advisory committee to
2consider the adequacy of the essential services plan and
3consider any request for revision of the essential services plan
4made by the district advisory committee.

5(b) Filing of amendment.--The administrator may file a
6proposed essential services plan amendment with the secretary
7and each member of the district advisory committee at any time.
8The district advisory committee may request a public meeting to
9consider the amendment within five days of the filing of a
10proposed essential services plan amendment.

11(c) Notice of amendment.--No later than the date that the
12administrator files the proposed essential services plan
13amendment, the administrator shall provide notice to the public
14of the amended essential services plan using the procedure
15provided for by section 437(c)(1). If the district advisory
16committee requests a public hearing, the administrator shall
17schedule a public meeting within 30 days of the date that the
18proposed essential services plan amendment was filed and provide
19notice of the public meeting using the procedure provided for by
20section 437(c)(2).

21(d) Comment period.--Written comments on the proposed
22essential services plan amendment may be filed with the
23administrator. Written comments must be made no later than 15
24days after the date of filing. Written comments judged by the
25administrator to have value to the essential services plan may
26be used to develop revisions for a final essential services plan
27amendment.

28(e) Administrator's public meeting.--If a public meeting is
29scheduled at the request of the district advisory committee, the
30administrator shall request in writing that the members of the

1district advisory committee be present at the administrator's
2meeting. At that meeting, the administrator shall:

3(1) Present a summary of the proposed essential services
4plan amendment.

5(2) Receive public comment on the proposed essential
6services plan amendment.

7(3) Allow the members of the district advisory committee
8to present written and oral comments requesting revisions of
9the proposed essential services plan amendment.

10(f) Final essential services plan amendment.--The
11administrator shall consider all timely submitted written
12comments, comments presented at the public meeting and requests
13for revision in the amendment of the publicly presented proposed
14essential services plan before filing a final essential services
15plan amendment. In the event that the administrator does not
16incorporate the requests for revision by the district advisory
17committee regarding the levels of services provided under the
18essential services plan or the basis for the calculation of fees
19assessed under the essential services plan, the administrator
20shall state in the essential services plan amendment why the
21requested revisions were not feasible to incorporate in the
22final essential services plan.

23(g) Emergency essential services plan amendment.--
24Notwithstanding the requirements provided by this section for
25the adoption of a final essential services plan amendment, where
26the secretary finds that there is or will be an imminent threat
27to public safety, human health or the environment, the secretary
28may provide a waiver to the administrator allowing the
29administrator to immediately publish an emergency essential
30services plan amendment. An emergency essential services plan

1amendment shall take effect immediately.

2(h) Notice of final essential services plan amendment.--The
3administrator shall provide notice of the publication of the
4final essential services plan amendment or emergency essential
5services plan amendment in the manner provided in section 437(c)
6(1)(i), (ii) and (v). Upon providing notice as required by this
7chapter, the administrator may execute any contract necessary to
8administer the essential services plan, as amended.

9(i) Appeal.--

10(1) Any person aggrieved by a final essential services
11plan amendment or emergency essential services plan amendment
12may appeal the final essential services plan amendment to the
13court of common pleas within 30 days of notice of the filing
14of the final essential services plan amendment.

15(2) For purposes of this section, notice shall
16constitute the date that the person received actual notice of
17the final essential services plan amendment, or the date that
18notice of the filing of the final essential services plan
19amendment is first published in a newspaper with general
20circulation serving the area in which the municipality is
21located.

22(3) An appeal of a final essential services plan
23amendment shall be limited to the amended portion of the
24essential services plan.

25(4) No appeal of a final essential services plan
26amendment shall constitute an automatic stay of any portion
27of the essential services plan.

28(5) The appeal shall be sustained only where the court
29finds that the final essential services plan amendment is
30unlawful or unconstitutional, or the conduct of the

1administrator is arbitrary or capricious.

2Section 445. Unincorporated Service District Trust Fund.

3(a) Establishment.--There is hereby established a special
4fund in the State Treasury, separate and apart from all other
5public moneys or funds of the Commonwealth, to be known as the
6Unincorporated Service District Trust Fund. The purpose of this
7fund shall be to hold moneys from unincorporated service
8districts and pay for the expenses and obligations of
9administrators, unincorporated service districts and the
10department pursuant to Subchapter C. The department shall
11allocate funds specific to a district in a restricted account
12pursuant to section 445.1.

13(b) Appropriation.--As much as may be necessary of such
14moneys and interest in the special fund established under
15subsection (a) is hereby appropriated for the purposes
16authorized by this subchapter.

17Section 445.1. Restricted accounts.

18(a) Establishment.--There is established in the
19Unincorporated Service District Trust Fund a restricted account
20for each unincorporated service district. The administrator for
21each district shall deposit all moneys collected by assessments,
22delinquent municipal tax receipts, and proceeds from the sale of
23municipal assets authorized under this subchapter into the
24restricted account not later than 30 days after collection. Any
25interest accrued on the account shall be credited to the account
26for purposes of meeting the requirements of this subchapter. The
27restricted account shall be used to pay for the expenses and
28obligations of the administrator and the unincorporated service
29district. The department may pay for the compensation and
30expenses of the administrator from the restricted account.

1(b) Appropriation.--As much as may be necessary of such
2moneys and interest in the restricted account established under
3subsection (a) is hereby appropriated for the purposes
4authorized by this subchapter.

5Section 446. Audit.

6The Auditor General shall conduct an annual audit of the
7district. The audit shall include a review of the services
8rendered under the essential services plan, the proceeds
9generated by the assessments levied pursuant to section 443 and
10all transactions made by the administrator on behalf of the
11district.

12Section 447. Merger and consolidation; incorporation of
13municipal corporation.

14(a) Merger and consolidation.--

15(1) For the limited purpose of merging or consolidating
16with one or more surrounding municipalities under 53 Pa.C.S.
17Ch. 7 Subch. C (relating to consolidation and merger), the
18residents of the district may file a petition with the county
19board of elections as provided in 53 Pa.C.S. §§ 735 (relating
20to initiative of electors seeking consolidation or merger
21without new home rule charter) and 735.1 (relating to
22initiative of electors seeking consolidation or merger with
23new home rule charter).

24(2) Residents of the district may be nominated to, and
25serve on, a commission formed to study merger or
26consolidation of the district with one or more
27municipalities.

28(3) Upon favorable action by the electorate on
29consolidation or merger, the administrator, in consultation
30with the district advisory committee, may enter into a merger

1or consolidation agreement with the governing bodies of other
2municipalities in accordance with 53 Pa.C.S. § 737 (relating
3to consolidation or merger agreement) and shall provide for
4the transition of the district into a consolidated or merged
5municipality with the same powers and duties as provided by
6law to governing bodies of municipalities.

7(4) The administrator may expend district funds to the
8extent authorized by law for the purpose of merger,
9consolidation or incorporation as provided in subsection (b).

10(b) Incorporation as municipality.--If the secretary
11determines that the district could be incorporated as a viable
12municipality, the residents of the district may establish or
13incorporate the territory of the district as a municipality as
14provided by law.

15(c) Grants permitted.--The department may issue any loan or
16grant authorized under Chapter 3 to a merged, consolidated or
17subsequently incorporated municipality, including the territory
18of the district to provide transitional assistance.

19(d) Assets in trust.--All assets conveyed to the
20Commonwealth to be held in trust, not otherwise transferred
21under the essential services plan or sold to repay the debt of
22the former municipality, shall be conveyed to a merged,
23consolidated or subsequently incorporated municipality,
24including the territory of the district.

25(e) Assumption of debt.--All debt obligations held in trust
26by the Commonwealth on behalf of the former municipality for
27service by a district shall be assumed by a merged, consolidated
28or subsequently incorporated municipality, including the
29territory of the district.

30Section 25. Chapter 5 of the act is repealed:

1[CHAPTER 5

2FUNDING

3Section 501. Appropriation.

4The sum of $5,000,000, appropriated under section 210 of the
5act of July 1, 1986 (P.L.1776, No.5A), known as the General
6Appropriation Act of 1986, shall be used to carry out the
7provisions of this act. The appropriation shall be distributed
8as follows:

9(1) $500,000 shall be used by the department for
10administrative expenses necessary to carry out the provisions
11of this act.

12(2) $4,500,000 shall be used to provide grants and loans
13to municipalities determined to be financially distressed
14pursuant to this act.]

15Section 26. Chapter 6 heading of the act, added October 20,
162011 (P.L.318, No.79), is amended to read:

17CHAPTER 6

18FISCAL EMERGENCIES IN [CITIES OF THE

19THIRD CLASS] MUNICIPALITIES

20Section 27. Sections 601, 602 and 603 of the act, renumbered
21and added October 20, 2011 (P.L.318, No.79), are amended to
22read:

23Section 601. Definitions.

24The following words and phrases when used in this chapter
25shall have the meanings given to them in this section unless the
26context clearly indicates otherwise:

27"Authority." A municipal authority, parking authority or any
28other authority or corporate entity that is directly or
29indirectly controlled by a distressed [city] municipality or to
30which a distressed [city] municipality has power of appointment.

1The term shall not include a joint municipal authority.

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

3"Debt obligations." Any obligation to pay money, including
4amounts owed for payments relating to lease rental debt, debt
5service, bonds, notes, guarantees for bonds or notes, trust
6indentures, contracts or other agreements.

7"Distressed [city] municipality." A [city] municipality
8which has been determined to be financially distressed under
9section 203(f).

10"Fiscal emergency." A determination made by the Governor
11under section 602(b).

12"Insolvent." Unable to meet all financial obligations as
13they become due, including payment of debt obligations.

14"Municipality." A municipality as defined in section 103,
15other than a city of the first class.

16"Vital and necessary services." Basic and fundamental
17municipal services, including any of the following:

18(1) Police and fire services.

19(2) Ambulance and rescue services.

20(3) Water supply and distribution.

21(4) Wastewater services.

22(5) Refuse collection and disposal.

23(6) Snow removal.

24(7) Payroll and pension obligations.

25(8) Fulfillment of payment of debt obligations or any
26other financial obligations.

27Section 602. Declaration of fiscal emergency.

28(a) Fiscal emergency.--The Governor determines a fiscal
29emergency exists if the distressed [city] municipality:

30(1) (i) is insolvent or is projected to be insolvent

1within 180 days or less; [or] and

2(ii) is unable to ensure the continued provision of
3vital and necessary services; [and] or

4(2) [(i)] has failed to adopt or implement:

5(i) the coordinator's plan in accordance with 
6Subchapter C or C.1 of Chapter 2; or

7(ii) [has failed to adopt or implement] an
8alternative plan that the secretary has approved under
9section 246.

10(b) Governor.--Upon making a determination that a state of
11fiscal emergency exists, the Governor may declare a state of
12fiscal emergency within the distressed [city] municipality.
13Immediately upon making the declaration, the Governor shall:

14(1) Provide written notice of the declaration to the 
15governing body and, if applicable, the chief executive 
16officer of the distressed [city] municipality along with a 
17concise statement of facts supporting the determination.

18(2) Direct the secretary to, within ten days of the
19Governor's declaration, develop an emergency action plan to
20ensure that vital and necessary services are maintained
21within the [city] municipality during the state of fiscal
22emergency.

23(c) Secretary.--In developing the emergency action plan, the
24secretary shall consider the financial plan prepared by the
25coordinator under Subchapter C of Chapter 2 and any other
26available plan or information the secretary deems appropriate
27and may employ financial or legal experts to assist in
28addressing the fiscal emergency. Notwithstanding any law to the
29contrary, the employment of such experts shall not be subject to
30contractual competitive bidding procedures.

1Section 603. Notification by the secretary.

2(a) Notice.--Upon completion of the emergency action plan,
3the secretary shall cause the plan to be posted on the
4department's publicly accessible Internet website and shall
5provide written notice of the emergency action plan by overnight
6delivery service, providing proof of receipt, to all members of
7the governing body and, if applicable, the chief executive
8officer of the distressed [city] municipality.

9(b) Publication.--The secretary shall publish once in a
10newspaper of general circulation notice that the emergency
11action plan has been completed. The notice shall specify the
12publicly accessible Internet address of the department's website
13where the plan is posted.

14Section 28. Sections 604, 605, 606, 607, 608, 609 and 610 of
15the act, added October 20, 2011 (P.L.318, No.79), are amended to
16read:

17Section 604. Powers of the Governor.

18(a) Powers.--During the state of fiscal emergency, the
19Governor may exercise the authority of the elected or appointed
20officials of the distressed [city] municipality or authority as
21necessary to ensure the provision of vital and necessary
22services and may delegate the authority to the secretary or a
23designee of the secretary. The emergency powers of the Governor
24shall include the following:

25(1) The power to collect funds payable to the distressed
26[city] municipality and authority and use those funds to pay
27for vital and necessary services.

28(2) The power to obtain emergency financial aid for the
29distressed [city] municipality and authority under Chapter 3
30to pay for vital and necessary services.

1(3) The power to enter into contracts and agreements on
2behalf of the distressed [city] municipality and authority to
3pay for vital and necessary services.

4(4) The power to modify the emergency action plan as
5necessary to ensure the provision of vital and necessary
6services.

7(5) Any other power of the elected or appointed
8officials of the distressed [city] municipality or authority
9to ensure the provision of vital and necessary services.

10(b) Orders.--The Governor may issue an order to an elected
11or appointed official of the distressed [city] municipality or
12an authority to implement any provision of the emergency action
13plan or refrain from taking any action that would interfere with
14the powers granted to the Governor or the goals of the plan. An
15order issued under this subsection shall be enforceable under
16section 606.

17(c) Authorization prohibited.--Neither this chapter nor the
18emergency action plan shall be interpreted to authorize the
19Governor to:

20(1) Unilaterally levy taxes.

21(2) Unilaterally abrogate, alter or otherwise interfere
22with a lien, charge, covenant or relative priority that is:

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

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

27(3) Unilaterally impair or modify existing bonds, notes,
28municipal securities or other lawful contractual or legal
29obligations of the distressed [city] municipality or
30authority[, except as otherwise ordered by a court of

1competent jurisdiction].

2(4) Authorize the use of the proceeds of the sale,
3lease, conveyance, assignment or other use or disposition of
4the assets of the distressed [city] municipality or
5authorities in a manner contrary to section 707.

6(5) Pledge the full faith and credit of the
7Commonwealth.

8Section 605. Elected and appointed officials.

9During a fiscal emergency, the authorities and appointed and
10elected officials of the distressed [city] municipality shall
11continue to carry out the duties of their respective offices,
12except that no decision or action shall conflict with an
13emergency action plan, order or exercise of power by the
14Governor under section 604.

15Section 606. Mandamus.

16The Governor may petition Commonwealth Court to issue a writ
17of mandamus upon any elected or appointed official of the
18distressed [city] municipality or authority to secure compliance
19with an order issued under section 604(b). The court shall grant
20the relief requested within 14 days of the filing of the
21petition if it determines that the order was issued in
22compliance with this chapter.

23Section 607. Consent agreement.

24(a) Negotiations.--Within eight days of the declaration of a
25fiscal emergency, the governing body and, if applicable, the
26chief executive officer of the distressed [city] municipality
27shall convene a special public meeting to negotiate a consent
28agreement. The meeting shall be attended by the secretary or
29secretary's designee. Negotiations among creditors and any of
30the parties in this subsection shall be conducted in accordance

1with section 223(b).

2(b) Contents.--

3(1) The consent agreement shall incorporate a plan
4setting forth measures designed to provide long-term
5financial stability to the distressed [city] municipality
6after the termination of the fiscal emergency.

7(2) The consent agreement shall include all of the
8following:

9(i) Continued provision of vital and necessary
10services.

11(ii) Payment of the lawful financial obligations of 
12the distressed [city] municipality and authority. This 
13subparagraph includes debt obligations, municipal 
14securities, lease rental obligations, legal obligations 
15and consensual modifications of existing obligations, 
16except as otherwise ordered by a court of competent 
17jurisdiction.

18(iii) Timely deposit of required payments to the
19pension fund for the distressed [city] municipality and
20each authority or the fund in which the distressed [city]
21municipality and each authority participates.

22(iv) Legislative and administrative actions to be
23taken by the elected or appointed officials of the
24distressed [city] municipality during the term of the
25consent agreement.

26(3) The consent agreement may include:

27(i) The sale, lease, conveyance, assignment or other
28use or disposition of the assets of the distressed [city]
29municipality or authority.

30(ii) Approval, modification, rejection,

1renegotiation or termination of contracts or agreements
2of the distressed [city] municipality or authorities.

3(iii) Execution of new contracts or agreements.

4(4) The consent agreement may not include any of the
5following:

6(i) Projections of revenue from a tax or tax rate
7not currently authorized by law.

8(ii) Provisions that unilaterally abrogate, alter or
9otherwise interfere with a lien, charge, covenant or
10relative priority, that is:

11(A) held by a holder of a debt obligation of a
12distressed [city] municipality; and

13(B) granted by the contract, law, rule or
14regulation governing the debt obligation.

15(iii) Provisions that unilaterally impair or modify
16existing bonds, notes, municipal securities or other
17lawful contractual or legal obligations of the distressed
18[city] municipality or authority[, except as otherwise
19ordered by a court of competent jurisdiction].

20(iv) Provisions that authorize the use of the
21proceeds of the sale, lease, conveyance, assignment or
22other use or disposition of the assets of the distressed
23[city] municipality or authorities in a manner contrary
24to section 707.

25(v) Any increase in the rate of an earned income tax
26imposed on nonresident workers.

27(c) Ordinance.--Notwithstanding any law to the contrary, the
28following shall apply:

29(1) Upon approval by a majority vote of the governing
30body of the distressed [city] municipality, the consent

1agreement shall be presented to the secretary within 20 days
2of the declaration of fiscal emergency.

3(2) The secretary shall approve or disapprove the
4consent agreement within three days.

5(3) If the secretary determines that the consent
6agreement is sufficient to overcome the distressed [city's]
7municipality's financial distress and approves the agreement,
8the governing body shall enact the consent agreement in the
9form of an ordinance within seven days of approval by the
10secretary.

11(4) The ordinance shall provide that, in the event of a
12breach or unilateral modification of the consent decree by
13the governing body or an elected or appointed official, the
14Governor may institute or reinstitute proceedings under
15Chapter 7.

16(d) Consent to proceedings under Chapter 7.--In addition to
17breach or modification of the consent agreement under subsection
18(c), the following shall be deemed consent to proceedings under
19Chapter 7:

20(1) Failure of the governing body of the distressed
21[city] municipality to convene or the failure of a quorum of
22the governing body to participate in a special public meeting
23required by subsection (a).

24(2) Failure of the governing body or, if applicable, the
25chief executive officer to enact a valid ordinance under
26subsection (c).

27(3) Failure of the distressed [city] municipality to
28comply with the consent agreement or provision of an
29ordinance enacted under subsection (c).

30(4) Enactment by the distressed [city] municipality of

1an amendment to the ordinance enacted in subsection (c) in
2violation of subsection (e).

3(e) Amendment.--The ordinance may be amended upon the
4approval of the secretary.

5(f) Collective bargaining.--A collective bargaining
6agreement or arbitration settlement executed following the
7enactment of an ordinance under this section may not in any
8manner violate, expand or diminish the provisions of the consent
9agreement, provided, however, that the provisions of section 252 
10shall apply to any consent agreement adopted in accordance with 
11this subchapter.

12Section 608. Termination of fiscal emergency and suspension of
13powers.

14(a) [Financial] Fiscal emergency.--A fiscal emergency shall
15end upon certification by the secretary that the [city is no
16longer financially distressed.] municipality:

17(1) is solvent and is not projected to be insolvent
18within 180 days or less; and

19(2) is able to ensure the continued provision of vital
20and necessary services after the termination of the fiscal
21emergency.

22(b) Governor's powers.--The emergency powers of the Governor
23under this chapter shall be suspended upon the enactment and
24continued implementation of an ordinance under section 607 or
25entry of a judicial order appointing a receiver under section
26702.

27Section 609. Restrictions.

28(a) Earned income tax on nonresidents.--A distressed [city]
29municipality subject to this chapter or Chapter 7 may not
30petition a court of common pleas for an increase in the rate of

1an earned income tax imposed on nonresident workers under
2section 123(c) [until the secretary terminates the distress
3status of the city under section 253] ◄unless the conditions 
4under section 710.1(c) are met.

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

10Section 610. Applicability.

11(a) Statement.--

12(1) This chapter shall apply only to distressed [cities]
13municipalities.

14(2) Except as set forth in subsection (b), nothing in
15this chapter is intended to limit or otherwise abrogate the
16applicability of any other part of this act.

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

20Section 29. Chapter 7 heading of the act, added October 20,
212011 (P.L.318, No.79), is amended to read:

22CHAPTER 7

23RECEIVERSHIP IN [CITIES OF THE

24THIRD CLASS] MUNICIPALITIES

25Section 30. Sections 701, 702, 703, 704, 705(g), 706, 707,
26708 and 709 of the act, added October 20, 2011 (P.L.318, No.79),
27are amended to read:

28Section 701. Definitions.

29The following words and phrases when used in this chapter
30shall have the meanings given to them in this section unless the

1context clearly indicates otherwise:

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

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

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

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

15"Fiscal emergency." A determination made by the Governor
16under section 602(b).

17"Insolvent." Unable to meet all financial obligations as
18they become due, including payment of debt obligations.

19"Vital and necessary services." Basic and fundamental
20municipal services, including any of the following:

21(1) Police and fire services.

22(2) Ambulance and rescue services.

23(3) Water supply and distribution.

24(4) Wastewater services.

25(5) Refuse collection and disposal.

26(6) Snow removal.

27(7) Payroll and pension obligations.

28(8) Fulfillment of payment of debt obligations or any
29other financial obligations.

30Section 702. Receivership.

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

8(b) Service and notice.--

9(1) The secretary shall serve the petition upon:

10(i) the governing body of the distressed [city]
11municipality;

12(ii) the chief executive officer of the distressed
13[city] municipality; and

14(iii) the governing body of each authority.

15(2) The secretary must publish notice of the filing of
16the petition once in a newspaper of general circulation.

17(c) Hearing.--Upon notification of the Governor of the
18failure of the distressed [city] municipality to adopt a valid
19ordinance under section 607, Commonwealth Court shall conduct a
20hearing within 15 days on the petition.

21(d) Determination.--No later than 60 days following the
22filing of a petition under this section, the court shall issue
23an order under subsection (e) if it finds by a preponderance of
24the evidence that all of the following apply:

25(1) Thirty days have passed since the declaration of a
26fiscal emergency.

27(2) There has been a failure by:

28(i) the governing body of the distressed [city]
29municipality to adopt an ordinance under section 607;

30(ii) the governing body of the distressed [city]

1municipality to implement an ordinance under section 607;
2[or]

3(iii) an elected or appointed official of the
4distressed city or authority to strictly comply with an
5order issued by the Governor under section 604[.]; or

6(iv) (Reserved).

7(3) A fiscal emergency under section 602(a) continues to
8exist.

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

10(1) set forth the findings under subsection (d);

11(2) grant the petition and declare the distressed [city]
12municipality to be in receivership;

13(3) appoint the individual named in the petition to be
14the receiver for a period not to exceed two years, subject to
15extension under section 710(b);

16(4) direct the receiver to develop a recovery plan
17within 30 days under section 703 and submit it to the court,
18the secretary, the governing body and, if applicable, the
19chief executive officer of the distressed [city]
20municipality; and

21(5) require and empower the receiver to implement the
22emergency action plan developed by the secretary under
23section 602 until a recovery plan developed by the receiver
24is approved by the court under section 703.

25(f) Additional actions.--

26(1) The Governor may direct the secretary to file a
27petition in Commonwealth Court to appoint an individual named
28in the petition as a receiver for the distressed [city]
29municipality if the distressed [city] municipality fails to
30comply with or has amended the ordinance without the approval

1of the secretary under section 607(d)(3) or (4).

2(2) The court shall conduct a hearing on the petition
3under paragraph (1) within 15 days of the filing of the
4petition.

5(3) No later than 60 days following the filing of the 
6petition under paragraph (1), the court shall issue an order 
7under subsection (e) if it finds by a preponderance of the 
8evidence that the distressed [city] municipality has failed 
9to comply with section 607(d)(3) or (4).

10Section 703. Recovery plan.

11(a) Issuance.--Within 30 days of the appointment of the
12receiver, the recovery plan required under section 702(e)(4)
13shall be furnished to Commonwealth Court, the secretary and the
14governing body and, if applicable, the chief executive officer
15of the distressed [city] municipality.

16(b) Contents.--The receiver shall consider the plan prepared
17by the coordinator under section 241 and any other existing
18alternate plans in the development of the recovery plan. The
19following shall apply:

20(1) The recovery plan shall provide for all of the
21following:

22(i) Continued provision of vital and necessary
23services.

24(ii) Payment of the lawful financial obligations of 
25the distressed [city] municipality and authorities. This 
26subparagraph includes debt obligations, municipal 
27securities, lease rental obligations, legal obligations 
28and consensual modifications of existing obligations.

29(iii) Timely deposit of required payments to the
30pension fund in which the distressed [city] municipality

1and each authority participates.

2(2) The recovery plan may include:

3(i) the sale, lease, conveyance, assignment or other
4use or disposition of the assets of the distressed [city]
5municipality or authority;

6(ii) the approval, modification, rejection,
7renegotiation or termination of contracts or agreements
8of the distressed [city] municipality or authorities,
9except to the extent prohibited by the Constitutions of
10the United States and Pennsylvania;

11(iii) the execution of new contracts or agreements;
12and

13(iv) other information the receiver deems
14appropriate.

15(c) Restrictions.--The recovery plan may not do any of the
16following:

17(1) Unilaterally levy taxes.

18(2) Unilaterally abrogate, alter or otherwise interfere
19with a lien, charge, covenant or relative priority that is:

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

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

24(3) Unilaterally impair or modify existing bonds, notes,
25municipal securities or other lawful contractual or legal
26obligations of the distressed [city] municipality or
27authority[, except as otherwise ordered by a court of
28competent jurisdiction].

29(4) Authorize the use of the proceeds of the sale,
30lease, conveyance, assignment or other use or disposition of

1the assets of the distressed [city] municipality or authority
2in a manner contrary to section 707.

3(d) Confirmation.--Commonwealth Court shall conduct a
4hearing on the recovery plan within 30 days of the receipt of
5the plan from the receiver. The court shall confirm the plan
6within 60 days of the receipt of the plan unless it finds clear
7and convincing evidence that the plan is arbitrary, capricious
8or wholly inadequate to alleviate the fiscal emergency in the
9distressed [city] municipality.

10(e) Modification of plan.--The receiver shall notify the
11Commonwealth Court of any modification to the plan. The court
12may conduct a hearing on the modification within 30 days of its
13receipt. The court shall confirm the modification within 60 days
14of receipt of notification of the modification unless it finds
15clear and convincing evidence that the recovery plan as modified
16is arbitrary, capricious or wholly inadequate to alleviate the
17fiscal emergency in the distressed [city] municipality.

18Section 704. Confirmation.

19(a) Effect of confirmation.--The confirmation of the
20recovery plan and any modification to the receiver's plan under
21section 703 shall have the effect of:

22(1) imposing on the elected and appointed officials of
23the distressed [city] municipality or an authority a
24mandatory duty to undertake the acts set forth in the
25recovery plan;

26(2) suspending the authority of the elected and
27appointed officials of the distressed [city] municipality or
28an authority to exercise power on behalf of the distressed
29[city] municipality or authority pursuant to law, charter,
30ordinance, rule or regulation to the extent that the power

1would interfere with the powers granted to the receiver or
2the goals of the recovery plan; and

3(3) superseding the emergency action plan developed by
4the secretary under section 602.

5(b) Form of government.--Confirmation of the recovery plan
6and any modification to the plan under section 703 shall not be
7construed to:

8(1) change the form of government of the distressed
9[city] municipality or an authority; or

10(2) except as set forth in subsection (a), affect powers
11and duties of elected and appointed officials of the
12distressed [city] municipality or an authority.

13(c) Collective bargaining.--A collective bargaining
14agreement or arbitration settlement executed after confirmation
15of a recovery plan may not, in any manner, violate, expand or
16diminish the provisions of the recovery plan, provided, however, 
17that the provisions of section 252 shall apply to any recovery 
18plan adopted in accordance with this chapter.

19Section 705. Receiver.

20* * *

21(g) Liability.--The receiver shall not be liable personally 
22for any obligations of the distressed [city] municipality or 
23authority. It is declared to be the intent of the General 
24Assembly that the receiver shall enjoy sovereign and official 
25immunity as provided in 1 Pa.C.S. § 2310 (relating to sovereign 
26immunity reaffirmed; specific waiver) and shall remain immune 
27from suit except as provided by and subject to the provisions of 
2842 Pa.C.S. Ch. 85 Subchs. A (relating to general provisions) and 
29B (relating to actions against Commonwealth parties).

30Section 706. Powers, duties and prohibited actions.

1(a) Powers and duties.--Notwithstanding any other provision
2of law, the receiver shall have the following powers and duties:

3(1) To require the distressed [city] municipality or
4authority to take actions necessary to implement the recovery
5plan under section 703.

6(2) To modify the recovery plan as necessary to achieve
7financial stability of the distressed [city] municipality and
8authorities in accordance with section 703.

9(3) To require the distressed [city] municipality or
10authority to negotiate intergovernmental cooperation
11agreements between the distressed [city] municipality and
12other political subdivisions in order to eliminate and avoid
13deficits, maintain sound budgetary practices and avoid
14interruption of municipal services.

15(4) To submit quarterly reports to the governing body
16and, if applicable, the chief executive officer of the
17distressed [city] municipality and to the department. The
18reports shall be posted on [the] a publicly accessible
19Internet website [for] maintained by the distressed [city]
20municipality.

21(5) To require the distressed [city] municipality or
22authority to cause the sale, lease, conveyance, assignment or
23other use or disposition of the distressed [city's]
24municipality's or authority's assets in accordance with
25section 707.

26(6) To approve, disapprove, modify, reject, terminate or
27renegotiate contracts and agreements with the distressed
28[city] municipality or authority, except to the extent
29prohibited by the Constitutions of the United States and
30Pennsylvania.

1(7) To direct the distressed [city] municipality or
2authority to take any other action to implement the recovery
3plan.

4(8) To attend executive sessions of the governing body
5of the distressed [city] municipality or authority and make
6reports to the public on implementation of the recovery plan.

7(9) [After July 1, 2012, to] To file a municipal debt 
8adjustment action under the Bankruptcy Code (11 U.S.C. § 101 
9et seq.) and to act on the [city's] municipality's behalf in 
10the proceeding. The power under this paragraph shall only be 
11exercised upon the written authorization of the secretary. 
12The filing of a municipal debt adjustment action under this 
13paragraph and any plan of the receiver accepted by the 
14Federal court shall be considered a modification of the 
15recovery plan, except that the modification shall not be 
16subject to judicial review under section 709. A recovery plan 
17submitted to and approved by the Federal court under a 
18Federal municipal debt adjustment action may include Federal 
19remedies not otherwise available under this chapter.

20(10) To meet and consult with the advisory committee
21under section 711.

22(11) To employ financial or legal experts deemed
23necessary to develop and implement the recovery plan.
24Notwithstanding any law to the contrary, the employment of
25such experts shall not be subject to contractual competitive
26bidding procedures.

<-27(12) To make a recommendation to the secretary that the
28municipality be disincorporated in accordance with Chapter 4.

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 30.1. Section 710 of the act is amended <-by adding a 
4subsection to read:

5Section 710. Termination of receivership.

<-6* * *

<-7(a) Time.--Except as provided under subsection (b) or (c),
8the receivership under this chapter shall expire two years after
9the appointment of the receiver.

10(b) Extension.--The secretary may petition Commonwealth 
11Court for one or more extensions of the receivership. The court 
12shall grant each extension [for] of up to another two years if 
13the secretary establishes by a preponderance of the evidence 
14that further implementation of the recovery plan is necessary 
15to end the fiscal emergency.

16(c) Termination of fiscal emergency.--Notwithstanding the
17date of expiration of receivership under subsection (a) or an
18extension of receivership under subsection (b), the receivership
19shall terminate upon the secretary's termination of a fiscal
20emergency under section 608(a).

21Section 31. The act is amended by adding a section to read:

22Section 710.1. Continuation of recovery plan.

23(a) Administrative determination required.--Within 30 days
24of the termination or expiration of the receivership under
25section 710, the secretary shall issue one of the following
26administrative determinations:

27(1) conditions within the municipality warrant a
28termination in status in accordance with section 255.1; or

29(2) the municipality continues to be financially
30distressed.

1(b) Appointment of coordinator.--Upon a determination under
2subsection (a)(2), a recovery plan adopted under section 703 <-and 
3confirmed by Commonwealth Court shall remain in effect and <-shall 
4be deemed to be a plan adopted under Chapter 2. The secretary
5shall appoint a coordinator in accordance with section 221. The
6receiver may be appointed as coordinator. The coordinator shall
7implement the recovery plan under section 247(a) subject to the
8following:

9(1) The plan shall be subject to amendment in accordance
10with section 249, provided that nothing in this section shall
11authorize the impairment of existing lawful contractual or
12legal obligations of the distressed municipality except where
13otherwise permitted by law.

14(2) The coordinator may exercise the same powers and
15duties of this chapter as a receiver for the purposes of
16issuing orders under section 708, and seek enforcement of
17such orders under section 709. The Commonwealth Court shall
18retain jurisdiction to hear an action under this paragraph.

19(3) The plan shall terminate as provided in section
20254(b)(2).

<-21(c) Conditions for increasing taxes on nonresident income.--
22Notwithstanding any other provision of law, a municipality
23exiting receivership and subject to a determination under
24subsection (a)(2) shall be subject to the same requirements as a
25city of the second class A under section 123(c)(3) before being
26authorized to increase the rate of taxation on nonresident
27income.

28Section 32. Sections 711(a) and (b) and 712(a)(1) of the
29act, added October 20, 2011 (P.L.312, No.79), are amended to
30read:

1Section 711. Municipal financial recovery advisory committee.

2(a) Establishment.--[There is established a] A municipal
3financial recovery advisory committee is established to meet and
4consult with the receiver in carrying out the duties under this
5chapter. The sole function of the advisory committee shall be to
6provide recommendations and feedback to the receiver on the
7implementation of the recovery plan.

8(b) Composition.--The advisory committee established under
9subsection (a) shall be comprised of the following:

10(1) The chief executive officer, if any, of the
11distressed [city] municipality or a designee.

12(2) The president of the governing body of the
13distressed [city] municipality or a designee.

14(3) One member appointed by the county commissioners of
15the county where the distressed [city] municipality is
16located.

17(4) One member appointed by the Governor.

18* * *

19Section 712. Applicability.

20(a) Statement.--

21(1) This chapter shall apply only to distressed [cities]
22municipalities.

23* * *

24Section 33. This act shall apply as follows:

25(1) The addition of section 122(c) of the act shall
26apply to any and all regulations in effect on the effective
27date of this section.

28(2) The amendment or addition of sections 608, 710 and
29710.1(a) and (b) of the act shall not apply to a municipality
30that entered receivership prior to the effective date of this

1section and shall not supersede or constitute grounds to
2modify any order of court issued prior to the effective date
3of this section.

<-4Section 34. For tax years beginning after the effective date
5of this section, a financially distressed municipality shall be
6prohibited from using the special taxing authority in section
7607(f) of the act of December 18, 1984 (P.L.1005, No.205), known
8as the Municipal Pension Plan Funding Standard and Recovery Act,
9to impose an increase in the rate<-, over the rate imposed as of 
10June 30, 2014, of taxation on nonresident income unless an equal
11or greater increase in the rate of taxation on resident income,
12over the highest rate levied in the previous fiscal year, is
13imposed in the same tax year.

14Section 35. The addition of section 255.1 of the act shall
15not apply to determinations issued by the Secretary of Community
16and Economic Development prior to the effective date of this
17section or to appeals pending on the effective date of this
18section.

19Section <-34 36. This act shall take effect in 60 days. as 
20follows:

21(1) Section 34 of this act and this section shall take
22effect immediately.

23(2) The remainder of this act shall take effect in 60
24days.