PRIOR PRINTER'S NOS. 141, 895, 944 PRINTER'S NO. 1228
No. 136 Session of 1987
INTRODUCED BY RHOADES, SINGEL, CORMAN, WENGER AND STOUT,
JANUARY 15, 1987
SENATOR TILGHMAN, APPROPRIATIONS, RE-REPORTED AS AMENDED,
JUNE 29, 1987
AN ACT
1 Empowering the Department of Community Affairs to declare
2 certain municipalities as financially distressed; providing
3 for the restructuring of debt of financially distressed
4 municipalities; limiting the ability of financially
5 distressed municipalities to obtain government funding;
6 authorizing municipalities to participate in Federal debt
7 adjustment actions and bankruptcy actions under certain
8 circumstances; and providing for consolidation or merger of
9 contiguous municipalities to relieve financial distress.
10 TABLE OF CONTENTS
11 Chapter 1. General Provisions
12 Subchapter A. Preliminary Provisions
13 Section 101. Short title.
14 Section 102. Purpose and legislative intent.
15 Section 103. Definitions.
16 Subchapter B. Administrative Provisions
17 Section 121. Powers and duties of department.
18 Section 122. Duties of Commonwealth agencies.
19 Section 123. Powers and duties of municipalities.
20 Subchapter C. Judicial Provisions
1 Section 141. Jurisdiction of court of common pleas.
2 Chapter 2. Municipal Financial Distress
3 Subchapter A. Determination of Municipal Financial Distress
4 Section 201. Criteria.
5 Section 202. Standing to petition for a determination.
6 Section 203. Procedure for determination.
7 Section 204. Commonwealth funds.
8 Subchapter B. Coordinator
9 Section 221. Designation.
10 Section 222. Access to information.
11 Section 223. Public and private meetings.
12 Section 224. Coordinator barred from elective office.
13 Subchapter C. Coordinator's Plan
14 Section 241. Contents.
15 Section 242. Publication.
16 Section 243. Review of plan.
17 Section 244. Revision.
18 Section 245. Adoption by municipality.
19 Section 246. Preparation and action on alternate plan.
20 Section 247. Plan implementation.
21 Section 248. Failure to adopt or implement plan.
22 Section 249. Plan amendments.
23 Section 250. Debt provisions.
24 Section 251. Commonwealth agency payments or assistance.
25 Section 252. Plan not affected by certain collective
26 bargaining agreements or settlements.
27 Section 253. Termination of status.
28 Subchapter D. Application of Federal Law
29 Section 261. Filing municipal debt adjustment under Federal
30 law.
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1 Section 262. Significance and duty on filing Federal action.
2 Section 263. Application of this act during Federal action.
3 Section 264. Suspension of Commonwealth funding.
4 Chapter 3. Emergency Financial Aid for Distressed
5 Municipalities
6 Section 301. Program.
7 Section 302. Grant and loan procedure.
8 Section 303. Limitations.
9 SECTION 304. EXPIRATION. <--
10 Chapter 4. Consolidation or Merger of Economically Nonviable
11 Municipalities
12 Subchapter A. General Provisions
13 Section 401. Determination.
14 Section 402. Procedure for consolidation or merger.
15 Section 403. Joint agreement of governing bodies.
16 Section 404. Initiative of electors.
17 Section 405. Conduct of referenda.
18 Section 406. Consolidation or merger agreement.
19 Section 407. Effectuation of consolidation or merger.
20 Section 408. Collective bargaining agreements; furlough of
21 employees; disputes.
22 Section 409. Procedures.
23 Subchapter B. Economic Assistance
24 Section 421. Eligibility.
25 Section 422. Priority.
26 SECTION 423. LISTING OF ELIGIBLE MUNICIPALITIES. <--
27 Chapter 5. Funding
28 Section 501. Appropriation.
29 Chapter 6. Technical Provisions
30 Section 601. Repeals.
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1 Section 602. Expiration.
2 Section 603. Effective date.
3 The General Assembly of the Commonwealth of Pennsylvania
4 hereby enacts as follows:
5 CHAPTER 1
6 GENERAL PROVISIONS
7 SUBCHAPTER A
8 PRELIMINARY PROVISIONS
9 Section 101. Short title.
10 This act shall be known and may be cited as the Financially
11 Distressed Municipalities Act.
12 Section 102. Purpose and legislative intent.
13 (a) Policy.--It is hereby declared to be a public policy of
14 the Commonwealth to foster fiscal integrity of municipalities so
15 that they provide for the health, safety and welfare of their
16 citizens; pay due principal and interest on their debt
17 obligations when due; meet financial obligations to their
18 employees, vendors and suppliers; and provide for proper
19 financial accounting procedures, budgeting and taxing practices.
20 The failure of a municipality to do so is hereby determined to
21 affect adversely the health, safety and welfare not only of the
22 citizens of the municipality but also of other citizens in this
23 Commonwealth.
24 (b) Legislative intent.--
25 (1) It is the intent of the General Assembly to:
26 (i) Enact procedures and provide powers and
27 guidelines to ensure fiscal integrity of municipalities
28 while leaving principal responsibility for conducting the
29 governmental affairs of a municipality, including
30 choosing the priorities for and manner of expenditures
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1 based on available revenues, to the charge of its elected
2 officials, consistent with the public policy set forth in
3 this section.
4 (ii) Enact procedures for the adjustment of
5 municipal debt by negotiated agreement with creditors.
6 (2) The General Assembly further recognizes that
7 changing and deteriorating economic conditions, developing
8 technologies and attendant unemployment erode local tax bases
9 and threaten essential municipal services. Under such
10 circumstances, the General Assembly believes that such
11 distressed governmental units may no longer be viable and
12 that the citizens of those communities should be granted the
13 opportunity to voluntarily consolidate or merge their
14 municipalities with other municipalities in an effort to
15 allow municipal boundaries to reflect the geographic and
16 economic realities of a distressed area, to merge a common
17 community of interest, to take advantage of economies of
18 scale in providing services, and to create an expanded
19 revenue base to provide necessary public services to the
20 citizens of financially distressed municipalities.
21 Section 103. Definitions.
22 The following words and phrases when used in this act shall
23 have the meanings given to them in this section unless the
24 context clearly indicates otherwise:
25 "Basis of accounting." Revenues and expenditures may be
26 recognized on the cash, modified accrual or full accrual basis
27 of accounting, provided that basis is applied consistently
28 throughout the fiscal periods reported for evaluation purposes.
29 "Chief executive officer." Mayor in a mayor-council form of
30 government or manager in a council-manager form of government of
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1 a city operating under an optional form of government pursuant
2 to the act of July 15, 1957 (P.L.901, No.399), known as the
3 Optional Third Class City Charter Law; a mayor of a city of the
4 first class; or an individual serving in such capacity as
5 designated by a home rule charter or optional plan pursuant to
6 the act of April 13, 1972 (P.L.184, No.62), known as the Home
7 Rule Charter and Optional Plans Law.
8 "Claim." Right to payment, whether or not the right is
9 reduced to judgment, liquidated, unliquidated, fixed,
10 contingent, matured, unmatured, disputed, undisputed, legal,
11 equitable, secured or unsecured; or right to an equitable remedy
12 for breach of performance if the breach gives rise to a right to
13 payment, whether or not the right to an equitable remedy is
14 reduced to judgment, fixed, contingent, matured, unmatured,
15 disputed, undisputed, secured or unsecured.
16 "Commonwealth agency." The Governor and the departments,
17 boards, commissions, authorities and other officers and agencies
18 of this Commonwealth, whether or not subject to the policy
19 supervision and control of the Governor.
20 "Consolidated or merged municipality." A municipal entity
21 resulting from successful consolidation or merger proceedings
22 under Subchapter A of Chapter 4.
23 "Consolidation or merger." The combination of two or more
24 municipalities into one municipality.
25 "Contiguous territory." A territory of which a portion abuts
26 the boundary of another municipality, including territory
27 separated from the exact boundary of another municipality by a
28 street, road, railroad or highway, or by a river or other
29 natural or artificial stream of water.
30 "Creditor." An individual, partnership, corporation,
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1 association, estate, trust, governmental unit or the governing
2 board of a pension fund of a municipality that has a claim
3 against a municipality.
4 "Deficit." The excess of expenditures over revenues, stated
5 as a percentage of revenue, during an accounting period. This
6 calculation shall include all governmental fund types and all
7 proprietary fund types, but shall exclude all fiduciary fund
8 types of the municipality.
9 "Department." The Department of Community Affairs of this
10 Commonwealth.
11 "Election officials." The county boards of election, except
12 in a city of the first class where "election officials" means
13 the city board of elections.
14 "Expenditures." Reductions in fund equity, including current
15 operating expenses that require the use of fund equity, debt
16 service and capital outlays. The term shall not include
17 interfund transfers.
18 "Fund equity." Excess of assets of a fund over its
19 liabilities.
20 "Governing body." The council in cities, boroughs and
21 incorporated towns; the board of commissioners in counties; the
22 board of commissioners in townships of the first class; the
23 board of supervisors in townships of the second class, or the
24 legislative policy-making body in home rule municipalities.
25 "Initiative." The filing with applicable election officials
26 of a petition containing a proposal for a referendum to be
27 placed on the ballot of the next election. The petition shall
28 be:
29 (1) Filed not later than the 13th Tuesday prior to the
30 next election in which it will appear on the ballot.
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1 (2) Signed by voters comprising 5% of the persons voting
2 for the office of Governor in the last gubernatorial general
3 election in the municipality where the proposal will appear
4 on the ballot.
5 (3) Placed on the ballot by election officials in a
6 manner fairly representing the content of the petition for
7 decision by referendum at said election.
8 (4) Submitted not more than once in five years.
9 "Matured claim." A claim that has been reduced to judgment
10 or liquidated in amount by agreement for a period of 90 days
11 prior to the filing of a petition to commence fiscal distress
12 proceedings under this act.
13 "Municipal record." A financial record and document of a
14 municipality or of an authority incorporated by a municipality,
15 excluding confidential information relating to personnel matters
16 and matters relating to the initiation and conduct of
17 investigations of violations of law.
18 "Municipality." Every county, city, borough, incorporated
19 town, township and home rule municipality.
20 "Referendum." Placement of a question inserted on the
21 ballot, by initiative or otherwise, by a majority vote of the
22 electors voting thereon.
23 "Revenues." Additions to fund equity other than from
24 interfund transfers, proceeds of debt and proceeds of
25 disposition of general fixed assets.
26 "Secretary." The Secretary of Community Affairs of the
27 Commonwealth.
28 SUBCHAPTER B
29 ADMINISTRATIVE PROVISIONS
30 Section 121. Powers and duties of department.
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1 (a) Compile financial data.--
2 (1) A power and duty of the department shall be to
3 maintain accurate and current information and data on the
4 fiscal status of municipalities to determine if criteria set
5 forth in section 201 exist and, if so, whether the existence
6 of those factors validly indicates fiscal distress.
7 (2) In compiling the information and data, the
8 department shall mail, before January 1 of each year, a
9 Survey of Financial Condition form to each municipality
10 applicable to the municipality's prior fiscal year.
11 (i) The survey shall seek information necessary to
12 determine the fiscal status of a municipality, shall be
13 concise to facilitate prompt response and shall contain
14 an attestation clause to be signed by the presiding
15 officer of the municipality's governing body.
16 (ii) The survey shall be a supplement to and shall
17 be included with the annual audit reports submitted to
18 the department in accordance with law.
19 (iii) The survey shall include information based on
20 the criteria specified in section 201.
21 (iv) The survey shall include information relating
22 to the basis of accounting utilized by municipalities.
23 (b) Assess data.--A power and duty of the department shall
24 be to apply the criteria of section 201 to data and information
25 on the fiscal status of municipalities to assess the validity
26 and applicability of an indication of municipal financial
27 distress. In assessing validity and applicability, the
28 department shall undertake a review process including, but not
29 limited to, consultation, correspondence and visits with a
30 municipality which appears to be financially distressed,
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1 notwithstanding the provisions of section 2501-C(e) and (f) of
2 the act of April 9, 1929 (P.L.177, No.175), known as The
3 Administrative Code of 1929, which limits department
4 intervention to incidences when such is requested by the
5 municipality. If the department assesses that a municipality
6 needs assistance to correct minor fiscal problems, the
7 department shall offer appropriate recommendations. If the
8 municipality adopts those recommendations, the department need
9 take no further action.
10 (c) Notify agencies of determination.--Upon the making of a
11 determination by the secretary that a municipality is distressed
12 pursuant to section 203(f), the department shall immediately
13 notify the heads of all Commonwealth agencies of the
14 determination.
15 (d) Act as analyzer of municipal reports.--A power and duty
16 of the department shall be to act as the Commonwealth analyzer
17 for relevant reports, data and information required by law to be
18 filed by municipalities with any Commonwealth agency when such
19 reports, data and information directly relate to the financial
20 conditions of municipalities. The department shall, in
21 consultation with every Commonwealth agency, determine which
22 reports, data and information relate to the fiscal condition of
23 municipalities. Upon an indication of distress in a municipality
24 through information available to the department, the department
25 shall request data, reports and information from all
26 Commonwealth agencies to assist the department to substantiate a
27 possible distress status of a municipality.
28 (e) Furnish program data to municipality.--Upon receipt of
29 information forwarded to the department by each Commonwealth
30 agency pursuant to section 122(a), the department shall furnish
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1 this information to the distressed municipality coordinator for
2 possible inclusion of such information into the plan developed
3 by the coordinator in accordance with Subchapter C of Chapter 2.
4 (f) Develop early warning system.--In conjunction with
5 assessing a municipality's current fiscal stability under
6 subsections (a) and (b) and section 201, the department shall
7 develop an early warning system utilizing necessary fiscal and
8 socioeconomic variables to identify municipal financial
9 emergencies before they reach crisis proportions and to notify
10 an affected municipality appropriately. The department shall be
11 responsible for testing the validity and reliability of these
12 variables and shall continuously monitor them to assure their
13 effectiveness. In developing an early warning system, the
14 department may employ or contract with municipal fiscal
15 consultants as deemed necessary to execute the provisions of
16 this subsection. Notice shall be published in the Pennsylvania
17 Bulletin that the early warning system has been developed and
18 the system may not become operational until the publication of
19 the notice.
20 (g) Distribute grants and loans.--The department shall
21 distribute grants and loans to financially distressed
22 municipalities in accordance with Chapter 3.
23 (h) Promulgate rules and regulations.--The department shall
24 promulgate rules and regulations necessary to implement the
25 provisions of this act.
26 Section 122. Duties of Commonwealth agencies.
27 (a) Review programs.--After the secretary makes a
28 determination that a municipality is distressed and the
29 department notifies Commonwealth agencies of the secretary's
30 determination pursuant to section 121(c), each agency shall
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1 review all matters and programs pending, underway or about to be
2 commenced or possible programs concerning the distressed
3 municipality. An action which is within the authority and budget
4 of a Commonwealth agency and which, in the judgment of the head
5 of the agency, will help to improve the distressed
6 municipality's financial situation shall be reported to the
7 department.
8 (b) Transfer documented information.--Upon request of the
9 department, each Commonwealth agency shall forward to the
10 department all documented reports, data and other information
11 referred to in section 121(d) within 30 days of receipt.
12 Section 123. Powers and duties of municipalities.
13 (a) File completed survey.--On or before March 15 of each
14 year, every municipality shall return to the department a
15 completed Survey of Financial Conditions referred to in section
16 121(a). No municipality shall receive its alloted payments
17 pursuant to the act of June 1, 1956 (1955 P.L.1944, No.655),
18 referred to as the Liquid Fuels Tax Municipal Allocation Law,
19 unless it complies with the provisions of this section,
20 notwithstanding a provision of law to the contrary, and the
21 Department of Transportation may not disburse funds to a
22 municipality pursuant to the Liquid Fuels Tax Municipal
23 Allocation Law until notified by the department that the
24 municipality has complied with the provisions of this section.
25 (b) File applications for grants and loans.--A financially
26 distressed municipality may apply to the secretary for emergency
27 financial aid in the form of a grant or loan pursuant to Chapter
28 3.
29 (c) Right to petition court for tax increase.--After a
30 municipality has adopted a plan under Subchapter C of Chapter 2,
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1 it may petition the court of common pleas of the county in which
2 the municipality is located to increase its rates of taxation
3 for earned income, real property, or both, beyond maximum rates
4 provided by law. If a tax increase above existing limits is
5 granted by the courts, the increase shall be effective for a
6 period of one year from the date a final plan is adopted by the
7 governing body pursuant to section 245. Subsequent increases in
8 rates of taxation may be granted by the court upon annual
9 petition of the municipality. The additional amount of taxes
10 resulting from the petition shall not be subject to sharing with
11 a school district.
12 SUBCHAPTER C
13 JUDICIAL PROVISIONS
14 Section 141. Jurisdiction of court of common pleas.
15 The court of common pleas of each county shall have
16 jurisdiction to hear a petition filed by a municipality which
17 has adopted a final plan pursuant to Subchapter C of Chapter 2
18 to increase rates of taxation for earned income, real property,
19 or both, beyond maximum rates provided by law. The court may
20 extend annually the increased taxing powers of the municipality
21 until the termination date of the plan adopted by the
22 municipality pursuant to Chapter 2.
23 CHAPTER 2
24 MUNICIPAL FINANCIAL DISTRESS
25 SUBCHAPTER A
26 DETERMINATION OF MUNICIPAL FINANCIAL DISTRESS
27 Section 201. Criteria.
28 The evaluation of a municipality's financial stability by the
29 department under section 121 shall include each of the following
30 criteria. If at least one criterion is present and the
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1 department assesses pursuant to section 121(b) that it is a
2 valid indication of municipal financial distress, then the
3 department shall exercise its powers and duties pursuant to
4 section 121.
5 (1) The municipality has maintained a deficit over a
6 three-year period, with a deficit of 1% or more in each of
7 the previous fiscal years.
8 (2) The municipality's expenditures have exceeded
9 revenues for a period of three years or more.
10 (3) The municipality has defaulted in payment of
11 principal or interest on any of its bonds or notes or in
12 payment of rentals due any authority.
13 (4) The municipality has missed a payroll for 30 days.
14 (5) The municipality has failed to make required
15 payments to judgment creditors for 30 days beyond the date of
16 the recording of the judgment.
17 (6) The municipality, for a period of at least 30 days
18 beyond the due date, has failed to forward taxes withheld on
19 the income of employees or has failed to transfer employer or
20 employee contributions for Social Security.
21 (7) The municipality has accumulated and has operated
22 for each of two successive years a deficit equal to 5% or
23 more of its revenues.
24 (8) The municipality has failed to make the budgeted
25 payment of its minimum municipal obligation as required by
26 section 302 of the act of December 18, 1984 (P.L.1005,
27 No.205), known as the Municipal Pension Plan Funding Standard
28 and Recovery Act, with respect to a pension fund during the
29 fiscal year for which the payment was budgeted and has failed
30 to take action within that time period to make required
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1 payments.
2 (9) A municipality has sought to negotiate resolution or
3 adjustment of a claim in excess of 30% against a fund or
4 budget and has failed to reach an agreement with creditors.
5 (10) A municipality has filed a municipal debt
6 readjustment plan pursuant to Chapter 9 of the Bankruptcy
7 Code (11 U.S.C. § 901 et seq.).
8 (11) The municipality has experienced a decrease in a
9 quantified level of municipal service from the preceding
10 fiscal year which has resulted from the municipality reaching
11 its legal limit in levying real estate taxes for general
12 purposes. For determining levels of municipal service for the
13 year 1987, the department shall utilize annual statistical
14 data since the year 1982 to determine a pattern of decrease
15 in delivery of municipal services since 1982.
16 Section 202. Standing to petition for a determination.
17 The following have standing to seek a determination of
18 municipal financial distress from the secretary:
19 (1) The department itself, if, subsequent to its review
20 and analysis under sections 121 and 201, it concludes that a
21 municipality is substantially in a condition of financial
22 distress.
23 (2) The governing body of the municipality upon passing
24 a resolution by a majority vote of the governing body after a
25 special public meeting duly advertised as provided by law.
26 (3) A creditor with a matured claim to whom the
27 municipality owes $10,000 or more, if the creditor agrees in
28 writing to suspend pending actions and to forbear from
29 bringing an alternate or additional legal action against the
30 municipality to collect the debt or part of it for a period
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1 of nine months or until the municipality adopts a plan under
2 this act, whichever occurs first. The filing of a Federal
3 debt adjustment action by a municipality pursuant to
4 Subchapter D of Chapter 2 during the nine-month period
5 cancels the forbearance obligation.
6 (4) Ten percent of the number of electors of the
7 municipality that voted at the last municipal election, by
8 petition to the department alleging the municipality is
9 fiscally distressed.
10 (5) Trustee of a municipal pension fund; an actuary for
11 a pension fund; or 10% or more of the beneficiaries of a
12 pension fund upon petition to the department, provided that a
13 municipality has not timely deposited its minimum obligation
14 payment as required by section 302 of the act of December 18,
15 1984 (P.L.1005, No.205), known as the Municipal Pension Plan
16 Funding Standard and Recovery Act.
17 (6) Ten percent of the employees of the municipality who
18 have not been paid for over 30 days from the time of a missed
19 payroll, upon signing collectively the petition to the
20 department.
21 (7) Trustees or paying agents of a municipal bond
22 indenture.
23 (8) The elected auditors, appointed independent auditors
24 or elected controllers of a municipality if they have reason
25 to believe a municipality is in a state of financial distress
26 pursuant to section 201.
27 Section 203. Procedure for determination.
28 (a) Petition.--A party with standing to petition under
29 section 202 may petition the secretary seeking a determination
30 that the municipality involved is a financially distressed
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1 municipality. The petition shall:
2 (1) Allege the petitioner has standing to bring a
3 determination of the distress.
4 (2) State why the petitioner believes the municipality
5 is distressed under section 201.
6 (3) Include a listing of judgments recorded against the
7 municipality.
8 (4) Include any other material allegation justifying the
9 relief afforded by this act.
10 (5) If the petitioner is a municipality, the petition
11 may state why the petitioner believes manifestation of
12 section 201 criteria is imminent and inevitable. This
13 statement may be in lieu of the statement required under
14 paragraph (2).
15 (b) Hearing.--Within ten days of receiving a petition, the
16 secretary shall set a time and place for a public hearing which
17 shall be scheduled to be held on a date at least two weeks but
18 not more than 30 days later within the county of the subject
19 municipality.
20 (c) Investigation.--After receiving the petition but before
21 the public hearing, the secretary may make an investigation into
22 the financial affairs of the municipality. The results of the
23 investigation or any study previously conducted by the
24 department under section 121 shall be placed in the record of
25 the public hearing.
26 (d) Notice.--The secretary shall publish notice of the
27 hearing in accordance with the act of July 3, 1986 (P.L.388,
28 No.84), known as the Sunshine Act, at least once in a newspaper
29 with general circulation in the subject municipality and shall
30 give written notice by certified mail, with return receipt
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1 requested, upon the municipal clerk or municipal secretary, the
2 mayor, the municipal solicitor, each member of the governing
3 body of the municipality and the petitioner.
4 (e) Hearing officer.--The secretary or an official of the
5 department designated by the secretary shall conduct the public
6 hearing to hear testimony of the petitioners and other
7 interested persons.
8 (f) Determination.--Within 30 days after the hearing, the
9 secretary shall issue an administrative determination of whether
10 the municipality is financially distressed and reasons for the
11 determination.
12 (g) Appeal.--A determination by the secretary under this act
13 is appealable pursuant to Title 2 of the Pennsylvania
14 Consolidated Statutes (relating to administrative law and
15 procedure).
16 Section 204. Commonwealth funds.
17 No municipality shall be deemed to be distressed by reason of
18 circumstances arising as a result of the failure of the
19 Commonwealth to make any payment of money, including any Federal
20 money which passes through the Commonwealth, due the
21 municipality at the time such payment is due.
22 SUBCHAPTER B
23 COORDINATOR
24 Section 221. Designation.
25 (a) Appointment.--No later than 30 days following a
26 determination of municipal financial distress under section 203,
27 the secretary shall appoint a coordinator who shall prepare a
28 plan addressing the municipality's financial problems.
29 (b) Qualifications.--The coordinator may be an employee of
30 the department, furnished with additional staff or consultant
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1 assistance, if needed, or may be a consultant or consulting
2 firm. No elected or appointed official or employee of the
3 municipality shall be eligible for serving as coordinator. The
4 coordinator shall be experienced in municipal administration and
5 finance.
6 (c) Compensation.--The department shall be responsible for
7 compensating the coordinator appointed by the secretary for
8 reasonable salary and expenses. Notwithstanding any law to the
9 contrary, the appointment of a plan coordinator shall not be
10 subject to contractual competitive bidding procedures.
11 (d) Duties.--The coordinator shall prepare and administer a
12 plan designed to relieve the financial distress of the
13 municipality which he has been appointed to serve.
14 (e) Powers.--The coordinator may apply for grants and loans
15 pursuant to Chapter 3, as he deems necessary.
16 Section 222. Access to information.
17 The coordinator shall have full access to all municipal
18 records. If the coordinator believes that an official or
19 employee of the municipality is not answering questions
20 accurately or completely or is not furnishing information
21 requested, the coordinator may notify the official or employee,
22 in writing, to furnish answers to questions or to furnish
23 documents or records, or both. If the official or employee
24 refuses, the coordinator may seek a subpoena in the court of
25 common pleas to compel testimony and furnish records and
26 documents. An action is mandamus shall lie to enforce the
27 provisions of this section.
28 Section 223. Public and private meetings.
29 (a) Public meetings authorized.--The coordinator may hold
30 public meetings as defined in the act of July 3, 1986 (P.L.388,
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1 No.84), known as the Sunshine Act, in connection with plan
2 preparation.
3 (b) Private meetings authorized.--Notwithstanding the
4 provisions of the Sunshine Act, private negotiation sessions may
5 be conducted by the coordinator between the municipality and the
6 individual creditors in an effort to obtain the consent of each
7 creditor to the proposed adjustment and handling of specific
8 claims against the municipality.
9 Section 224. Coordinator barred from elective office.
10 The coordinator may not run for an elected office of the
11 municipality or its coterminous political subdivisions within
12 two years after the final adoption of a plan pursuant to this
13 act.
14 SUBCHAPTER C
15 COORDINATOR'S PLAN
16 Section 241. Contents.
17 A plan formulated by the appointed coordinator shall be
18 consistent with applicable law and shall include any of the
19 following factors which are relevant to alleviating the
20 financially distressed status of the municipality:
21 (1) Projections of revenues and expenditures for the
22 current year and the next two years, both assuming the
23 continuation of present operations and as impacted by the
24 measures in the plan.
25 (2) Recommendations which will:
26 (i) Satisfy judgments, past due accounts payable,
27 and past due and payable payroll and fringe benefits.
28 (ii) Eliminate deficits and deficit funds.
29 (iii) Restore to special fund accounts money from
30 those accounts that was used for purposes other than
19870S0136B1228 - 20 -
1 those specifically authorized.
2 (iv) Balance the budget, avoid future deficits in
3 funds and maintain current payments of payroll, fringe
4 benefits and accounts through possible revenue
5 enhancement recommendations, including tax or fee
6 changes.
7 (v) Avoid a fiscal emergency condition in the
8 future.
9 (vi) Enhance the ability of the municipality to
10 negotiate new general obligation bonds, lease rental
11 debt, funded debt and tax and revenue anticipation
12 borrowing.
13 (vii) Consider changes in accounting and automation
14 procedures for the financial benefit of the municipality.
15 (viii) Propose a reduction of debt due on specific
16 claims by an amortized or lump sum payment considered to
17 be the most reasonable disposition of each claim possible
18 for the municipality considering the totality of
19 circumstances.
20 (3) Possible changes in collective bargaining agreements
21 and permanent and temporary staffing level changes or changes
22 in organization.
23 (4) Recommended changes in municipal ordinances or
24 rules.
25 (5) Recommendations for special audits or further
26 studies.
27 (6) An analysis of whether conditions set forth in
28 section 261 exist, whether specific exclusive Federal
29 remedies could help relieve the municipality's financial
30 distress and whether filing a Federal debt adjustment action
19870S0136B1228 - 21 -
1 under Subchapter D is deemed to be appropriate.
2 (7) An analysis of whether the economic conditions of
3 the municipality are so severe that it is reasonable to
4 conclude that the municipality is no longer viable and should
5 consolidate or merge with an adjacent municipality or
6 municipalities pursuant to Chapter 4.
7 Section 242. Publication.
8 (a) Filing.--Within 90 days of being named, the coordinator
9 shall formulate a plan for relieving the municipality's
10 financial distress and shall deliver true and correct copies of
11 it to:
12 (1) The municipal clerk or municipal secretary, who
13 shall immediately place the copy on file for public
14 inspection in the municipal office.
15 (2) The secretary.
16 (3) Each member of the municipal governing body.
17 (4) The mayor.
18 (5) The chief financial officer of the municipality.
19 (6) The solicitor of the municipal governing body.
20 (7) All parties who have petitioned the secretary under
21 section 203.
22 (b) Date of filing.--For purposes of this section, the date
23 of filing the plan shall be the date on which the municipal
24 clerk or municipal secretary places a true and correct copy of
25 the plan on file for public inspection in the municipal office.
26 (c) Notices of plan.--
27 (1) On the date of filing, notice that a plan has been
28 filed and is open for public inspection in the municipal
29 office shall be published by the coordinator in the county
30 legal reporter and in one or more newspapers with general
19870S0136B1228 - 22 -
1 circulation serving the area in which the municipality is
2 located. The cost for publishing the notice shall be borne by
3 the department. The notice shall set forth the following
4 information:
5 (i) That a plan regarding the coordination and
6 relief of the municipality's financial distress was filed
7 pursuant to this act.
8 (ii) The date and place of filing.
9 (iii) That the public has 15 days from the date of
10 filing in which to file written comments on the plan.
11 (iv) The name and address of the coordinator to whom
12 written comments should be sent.
13 (v) Summary of the plan.
14 (2) Notice of a coordinator's public meeting on the plan
15 shall be published by the coordinator in the county legal
16 reporter and in one or more newspaper with general
17 circulation serving the area in which the municipality is
18 located. The department shall bear the cost for publishing
19 the notice. The notice shall contain the following
20 information:
21 (i) That the purpose of the coordinator's public
22 meeting is to receive public comments on the plan.
23 (ii) The date and place of the meeting.
24 (3) The coordinator may combine the publication of the
25 notice that a plan has been filed with the publication of the
26 notice of the public meeting.
27 (d) Comment period.--Written comments on the plan may be
28 filed with the coordinator. Written comments shall be made no
29 later than 15 days after the date of filing. Written comments
30 judged by the coordinator to have value to the plan may be used
19870S0136B1228 - 23 -
1 to develop a revised plan.
2 (e) Coordinator's public meeting.--A meeting conducted by
3 the coordinator in the municipality shall be set for a date not
4 later than 20 days after the date of filing the plan. The
5 coordinator shall request in writing that the chief executive
6 officer, each member of the municipal governing body and the
7 chief financial officer of the municipality to be present at the
8 coordinator's meeting. Comments on the plan shall be received by
9 the coordinator at that time.
10 Section 243. Review of plan.
11 (a) General rule.--The coordinator, in his discretion, shall
12 consider comments made on the plan. Creditors who do not consent
13 to the handling of their claim by the plan, shall notify the
14 coordinator of their rejection of the plan not later than ten
15 days before the public meeting scheduled by the governing body
16 under section 245.
17 (b) Rejected claims.--If a creditor has rejected the plan,
18 the coordinator shall make a written report to the governing
19 body stating whether the timing and amount of payment or
20 proposed resolution of the claim is the best disposition the
21 municipality can make.
22 (c) Additional negotiations authorized.--Additional
23 negotiations between the municipality and creditors rejecting
24 the plan shall be encouraged and presided over by the
25 coordinator.
26 (d) Governing body proposals.--The governing body of the
27 municipality may propose to the coordinator resolutions of
28 claims which have been the reason for rejection of the proposed
29 plan, and the coordinator may revise the plan accordingly.
30 (e) Revision on own initiative.--Nothing in this section
19870S0136B1228 - 24 -
1 shall preclude the coordinator from revising a plan of his own
2 initiative.
3 Section 244. Revision.
4 Neither the secretary nor the chief executive officer or the
5 governing body, as appropriate, may revise the coordinator's
6 plan. However, the coordinator shall consult with the secretary
7 and either the chief executive officer or the governing body
8 throughout the revision of the plan and shall give consideration
9 to comments they may propose.
10 Section 245. Adoption by municipality.
11 Not later than 15 days following the coordinator's public
12 meeting, the municipal governing body shall either enact an
13 ordinance approving the implementation of the plan, including
14 enactment of necessary related ordinances and revisions to
15 ordinances, or shall reject the plan and proceed under section
16 246. If the ordinance takes effect in a municipality operating
17 under an optional plan form of government or a home rule
18 charter, the chief executive officer may issue an order
19 directing the implementation of the plan no later than seven
20 days from the enactment of the ordinance by the governing body.
21 Section 246. Preparation and action on alternate plan.
22 (a) Chief executive officer's plan.--If the governing body
23 of a municipality that operates under an optional plan form of
24 government or a home rule charter enacts an ordinance directing
25 implementation of the coordinator's plan and the chief executive
26 officer refuses or fails to issue an order as provided in
27 section 245, or if the governing body refuses to enact an
28 ordinance approving the coordinator's plan, then the chief
29 executive officer, within 14 days of the action or refusal to
30 act on the ordinance by the governing body, shall develop a
19870S0136B1228 - 25 -
1 plan, including a signed order implementing it, which shall be
2 the subject of a public meeting no later than ten days following
3 its completion.
4 (1) The chief executive officer may conduct private
5 sessions before the public meeting with individual creditors
6 in an effort to obtain the consent of each creditor to
7 proposed adjustment and handling of specific claims against
8 the municipality. An agreement reached as a result of these
9 private sessions shall become a matter of record and part of
10 the proceedings of the public meeting conducted pursuant to
11 this subsection.
12 (2) The chief executive officer shall be responsible for
13 placing notice that a public meeting will be held on his
14 plan. Notice shall be published in the same manner as
15 provided in section 242(c). The coordinator shall attend the
16 public meeting and furnish written and oral comments on the
17 chief executive officer's plan.
18 (b) Governing body's plan.--In the case of a municipality
19 operating under a form of government other than an optional plan
20 form of government or a home rule charter, if the governing body
21 by majority vote refuses to enact an ordinance approving and
22 implementing the coordinator's plan as provided in section 245,
23 then within 14 days of its refusal the governing body shall
24 develop a plan which shall be the subject of a public meeting
25 held not later than ten days following plan completion.
26 (1) The governing body may conduct private sessions
27 before the public meeting with individual creditors in an
28 effort to obtain consent of each creditor to proposed
29 adjustment and handling of specific claims against the
30 municipality. An agreement reached as a result of these
19870S0136B1228 - 26 -
1 private sessions shall become a matter of record and part of
2 the proceedings of the public meeting conducted pursuant to
3 this subsection.
4 (2) The governing body shall be responsible for placing
5 notice that a public meeting will be held on its plan. Notice
6 shall be published in the same manner as provided in section
7 242(c). The coordinator shall attend the public meeting and
8 furnish written and oral comments on the governing body's
9 plan.
10 (c) Approval or rejection of plan.--Following the public
11 meeting on the chief executive officer's plan or the governing
12 body's plan, the governing body may enact an ordinance,
13 including necessary related implementing ordinances or revisions
14 to ordinances, approving the plan.
15 (d) Review by secretary.--
16 (1) If an ordinance is enacted approving a plan under
17 this section, it shall be forwarded to the secretary for
18 determination that the plan, when implemented, will overcome
19 the municipality's financial distress.
20 (2) If the secretary is of the opinion that the plan,
21 when implemented, will overcome the municipality's financial
22 distress, the secretary shall so inform the municipality.
23 (3) If the secretary is of the opinion that the plan,
24 when implemented, will not overcome the municipality's
25 financial problems, the secretary shall inform the
26 municipality of the following:
27 (i) The secretary's determination.
28 (ii) The reasons for the determination.
29 (iii) The applicability of sections 251 and 264 to
30 the municipality.
19870S0136B1228 - 27 -
1 Section 247. Plan implementation.
2 (a) Coordinator's plan.--If the coordinator's plan is
3 adopted by the municipal governing body, the coordinator shall
4 be charged with implementing his plan and shall:
5 (1) Give written notice of plan adoption to creditors,
6 collective bargaining units and other parties who will be
7 directly affected by plan implementation. In the notice he
8 shall outline the provisions of the plan and specify how that
9 person's claim or interest will be treated.
10 (2) Initiate plan implementation and continue its
11 implementation for at least four months.
12 (3) Oversee completion of the plan either by directly
13 controlling the implementation process or by turning the
14 implementation process over to a person designated by the
15 governing body or by the chief executive officer, as the case
16 may be. The person designated shall supply the coordinator
17 with monthly reports.
18 (4) Terminate the plan upon its completion.
19 (5) Suggest amendments to the plan which may be
20 necessary to implement or complete the plan.
21 (b) Chief executive officer's plan.--If the plan adopted is
22 the plan proposed by the chief executive officer in an optional
23 plan form of government or home rule charter, the chief
24 executive officer shall have the duties of the coordinator set
25 forth in subsection (a).
26 (c) Municipal governing body's plan.--If the plan adopted is
27 the plan proposed by the municipal governing body, a person
28 designated by the governing body shall have the duties of the
29 coordinator set forth in subsection (a).
30 Section 248. Failure to adopt or implement plan.
19870S0136B1228 - 28 -
1 If no plan is adopted or implemented pursuant to this
2 chapter, then sections 251 and 264 shall apply.
3 Section 249. Plan amendments.
4 An amendment to an adopted plan may be initiated by the
5 coordinator, the chief executive officer, or the governing body
6 of a municipality, as the case may be. The adoption of an
7 amendment shall be by ordinance.
8 Section 250. Debt provisions.
9 Adoption of a plan by ordinance is a condition precedent for
10 the approval of long-term debt or funding debt under the act of
11 July 12, 1972 (P.L.781, No.185), known as the Local Government
12 Unit Debt Act. A debt financing provision of the plan may be
13 waived by agreement of the lender and the municipality; but any
14 such waiving must be expressly set forth in the indenture or
15 contract securing the debt.
16 Section 251. Commonwealth agency payments or assistance.
17 (a) Withholding of certain Commonwealth funds.--Except as
18 provided in section 302(b), upon certification by the secretary
19 that a financially distressed municipality has failed to adopt a
20 plan or implement an adopted plan as proposed under this act or
21 has adopted a plan which is inadequate to address the
22 municipality's financial distress, the municipality shall not
23 receive a grant, loan, entitlement or payment from the
24 Commonwealth or any of its agencies. Moneys withheld shall be
25 held in escrow by the Commonwealth until the secretary has
26 rescinded the certification.
27 (b) Exceptions to the withholding of Commonwealth funds.--
28 Notwithstanding the provisions of subsection (a), the following
29 funds shall not be withheld from a municipality.
30 (1) Capital projects under contract in progress.
19870S0136B1228 - 29 -
1 (2) Moneys received by a municipality from an agency of
2 the Commonwealth or the Federal Government subsequent to the
3 declaration of a disaster resulting from a catastrophe.
4 (3) Pension fund disbursements made pursuant to State
5 law.
6 Section 252. Plan not affected by certain collective bargaining
7 agreements or settlements.
8 A collective bargaining agreement or arbitration settlement
9 executed after the adoption of a plan shall not in any manner
10 violate, expand or diminish its provisions.
11 Section 253. Termination of status.
12 (a) Determination by secretary.--Following a duly advertised
13 public hearing with notices given as provided in section 203,
14 the secretary may issue a determination that the conditions
15 which led to the earlier determination of municipal financial
16 distress municipality are no longer applicable. The
17 determination shall rescind the status of municipal financial
18 distress and shall include a statement of facts as part of the
19 final order.
20 (b) Determination upon petition by a municipality.--A
21 financially distressed municipality may petition the secretary
22 to make a determination that the conditions which led to the
23 earlier determination of municipal financial distress are no
24 longer present. Upon receiving the petition, the secretary may
25 issue a determination to rescind following a duly advertised
26 public hearing with notices given as provided in section 203.
27 SUBCHAPTER D
28 APPLICATION OF FEDERAL LAW
29 Section 261. Filing municipal debt adjustment under Federal
30 law.
19870S0136B1228 - 30 -
1 (a) Authorization.--In the event one of the following
2 conditions is present, a municipality is hereby authorized to
3 file a municipal debt adjustment action pursuant to the
4 Bankruptcy Code (11 U.S.C. § 101 et seq.):
5 (1) After recommendation by the plan coordinator
6 pursuant to section 241(6).
7 (2) Imminent jeopardy of an action by a creditor,
8 claimant or supplier of goods or services which is likely to
9 substantially interrupt or restrict the continued ability of
10 the municipality to provide health or safety services to its
11 citizens.
12 (3) One or more creditors of the municipality have
13 rejected the proposed or adopted plan, and efforts to
14 negotiate resolution of their claims have been unsuccessful
15 for a ten-day period.
16 (4) A condition substantially affecting the
17 municipality's financial distress is potentially solvable
18 only by utilizing a remedy exclusively available to the
19 municipality through the Federal Municipal Debt Readjustment
20 Act (48 Stat. 798).
21 (5) A majority of the current or immediately preceding
22 governing body of a municipality determined to be financially
23 distressed has failed to adopt a plan or to carry out the
24 recommendations of the coordinator pursuant to this act.
25 (b) Majority vote.--This authority may be exercised only
26 upon the vote by a majority of the municipality's governing
27 body.
28 Section 262. Significance and duty on filing Federal action.
29 (a) Status.--A municipality which files a municipal debt
30 adjustment action under Federal law shall be deemed to be a
19870S0136B1228 - 31 -
1 financially distressed municipality under this act.
2 (b) Notice.--The municipality shall immediately notify the
3 secretary and the plan coordinator, if one has been assigned, of
4 the Federal filing.
5 (c) Appointment of coordinator.--Upon receipt of notice of
6 filing of the Federal action by a municipality, the secretary
7 shall appoint a plan coordinator under section 221, if none had
8 yet been appointed. The coordinator shall formulate a plan
9 approvable by the Federal court.
10 Section 263. Application of this act during Federal action.
11 (a) Existing plan.--After filing a Federal municipal debt
12 adjustment action, if there is a plan in process under the terms
13 of this act, the municipality shall utilize the plan and the
14 expertise of the plan coordinator, among others available to it,
15 to work out a revised plan to be proposed through the Federal
16 action, adapting it to incorporate Federal remedies which are
17 appropriate in the circumstances.
18 (b) Necessary plan development.--A municipality which files
19 a municipal debt adjustment action under Federal law, whether or
20 not a proceeding under this act had been commenced as of the
21 date of such filing, shall utilize the procedures set up by this
22 act concurrently with the processing of the Federal action, so
23 as to efficiently expedite the formulation of a plan, its timely
24 confirmation by the Federal court having jurisdiction of the
25 Federal action and its adoption by ordinance.
26 (c) Plan implementation.--After adoption of a plan by the
27 municipality as an ordinance and confirmation of the plan by the
28 Federal court, implementation of the plan shall be coordinated
29 through this act and in accordance with requirements set by the
30 Federal court.
19870S0136B1228 - 32 -
1 Section 264. Suspension of Commonwealth funding.
2 (a) General rule.--A municipality which remains classified
3 as financially distressed by the department and has failed to
4 adopt or implement a plan within a period set by the Federal
5 court, or has failed or refused to follow a recommendation by a
6 coordinator, shall be notified in writing by the coordinator
7 that he is requesting the secretary to issue a suspension of
8 Commonwealth funding to the municipality for its failure to take
9 the steps enumerated in the notice.
10 (b) Municipality's response.--The municipality shall have
11 ten days from the date of the coordinator's notice in which to
12 show cause to the secretary and the coordinator why Commonwealth
13 funding to the municipality should not be suspended.
14 (c) Certification.--If the municipality has not adequately
15 shown cause to the secretary and coordinator why such action
16 should not be taken, the secretary, within 20 days of the
17 coordinator's request, shall certify to the municipality in
18 writing that each grant, loan, entitlement or payment by the
19 Commonwealth or any of its agencies shall be suspended pending
20 adoption of a plan calculated to fully resolve the
21 municipality's financial distress. Suspended funds shall be held
22 in escrow by the Commonwealth until the secretary has rescinded
23 the certification.
24 (d) Exception.--Notwithstanding the provisions of subsection
25 (c), the following funds shall not be withheld from a
26 municipality:
27 (1) Capital projects under contract in progress.
28 (2) Moneys received by a municipality from an agency of
29 the Commonwealth or the Federal Government subsequent to the
30 declaration of a disaster resulting from a catastrophe.
19870S0136B1228 - 33 -
1 (3) Pension fund disbursements made pursuant to State
2 law.
3 (4) A grant or loan made pursuant to section 302(b) of
4 this act.
5 CHAPTER 3
6 EMERGENCY FINANCIAL AID FOR DISTRESSED MUNICIPALITIES
7 Section 301. Program.
8 (a) Establishment.--There is hereby established within the
9 department a program to provide emergency grants and loans to
10 municipalities declared to be distressed in accordance with this
11 act.
12 (b) Nature of loans.--All loans granted by the department
13 shall be free from interest and repayable according to a
14 schedule which will not hinder the satisfactory completion of a
15 plan adopted and implemented under this act.
16 Section 302. Grant and loan procedure.
17 (a) General provisions.--A financially distressed
18 municipality or the coordinator may apply to the secretary for a
19 grant or loan subsequent to the adoption of a plan by a
20 municipality pursuant to Chapter 2. In cases where the plan
21 finally adopted has been formulated by the chief executive
22 officer or governing body, the chief executive officer or a
23 person designated by the governing body may apply to the
24 secretary for a grant or loan.
25 (b) Immediate emergencies.--In cases where a municipality
26 has been declared distressed but prior to final adoption of a
27 plan, the municipality or the coordinator appointed may apply to
28 the department for an expedited loan or grant to immediately
29 assist the distressed municipality if either of the following
30 conditions exists:
19870S0136B1228 - 34 -
1 (1) The applicant verifies that he believes the
2 municipality is in imminent danger of insolvency.
3 (2) The applicant verifies that he believes there is a
4 clear and present danger to the health and safety of
5 residents of the municipality.
6 (c) Approval.--
7 (1) Upon receipt of an application under subsection (a),
8 the secretary shall set a date for a hearing to be held not
9 sooner than ten days nor later than 30 days from the date of
10 receipt of the application. At the hearing the secretary
11 shall receive evidence which sets forth the necessity for the
12 moneys requested. The hearing shall be conducted at an
13 acceptable location within the municipality to accommodate
14 all interested parties. If satisfied that sufficient evidence
15 exists to warrant a grant or loan, the secretary shall
16 approve the application and order the department to
17 distribute moneys requested subject to the limitations set
18 forth in section 303(c).
19 (2) Upon receipt of an application under subsection (b),
20 the secretary shall review all data immediately available and
21 shall determine whether emergency funds are warranted. If
22 warranted, the secretary shall approve the application and
23 order the department to distribute moneys requested. The
24 secretary or the applicant may request a hearing to provide
25 additional evidence of emergency need, but if requested, the
26 hearing shall be held not later than 15 days from the date
27 the application is received.
28 Either determination is appealable under Title 2 of the
29 Pennsylvania Consolidated Statutes (relating to administrative
30 law and procedures).
19870S0136B1228 - 35 -
1 Section 303. Limitations.
2 (a) Use.--No loan or grant given to a financially distressed
3 municipality by the department shall be used by the municipality
4 to pay debts incurred by the municipality prior to the
5 determination by the secretary that the municipality is
6 financially distressed.
7 (b) Eligibility.--Cities of the first and second class and
8 counties of the first class may not apply for a grant or loan <--
9 under this act.
10 (c) Amount.--The secretary shall not approve an application
11 to any one municipality for an amount which will substantially
12 impair the department's ability to distribute the remaining sum
13 fairly and equitably to other applicants or potential
14 applicants.
15 SECTION 304. EXPIRATION. <--
16 THIS CHAPTER SHALL EXPIRE JUNE 30, 1990.
17 CHAPTER 4
18 CONSOLIDATION OR MERGER OF ECONOMICALLY NONVIABLE
19 MUNICIPALITIES
20 SUBCHAPTER A
21 GENERAL PROVISIONS
22 Section 401. Determination.
23 If a municipality has been determined to be financially
24 distressed pursuant to this act and the coordinator has further
25 determined under section 241 that consolidation or merger of the
26 municipality with an adjacent municipality or municipalities is
27 in the public interest, then the municipality may utilize the
28 provisions of this chapter.
29 Section 402. Procedure for consolidation or merger.
30 Two or more municipalities may be consolidated or merged into
19870S0136B1228 - 36 -
1 a single municipality, whether within the same or different
2 counties, if each of the municipalities is contiguous to at
3 least one of the other consolidating or merging municipalities,
4 and if together such municipalities would form a consolidated or
5 merged municipality. Consolidation or merger may be commenced by
6 one of the following:
7 (1) Joint agreement of the governing bodies of the
8 municipalities proposed for consolidation or merger approved
9 by ordinance.
10 (2) Initiative of electors.
11 Section 403. Joint agreement of governing bodies.
12 (a) General rule.--The governing body of each municipality
13 to be consolidated or merged shall enter into a joint agreement
14 under the official seal of each municipality to consolidate or
15 merge into one municipality.
16 (b) Elements.--The joint agreement shall set forth:
17 (1) The name of each municipality that is a party to the
18 agreement.
19 (2) The name and the territorial boundaries of the
20 consolidated or merged municipality.
21 (3) The type and class of the consolidated or merged
22 municipality.
23 (4) Whether the consolidated or merged municipality
24 shall be governed solely by the code and other general laws
25 applicable to the kind and class of the consolidated or
26 merged municipality or whether it shall be governed by a home
27 rule charter or an optional plan of government previously
28 adopted by one of the consolidating or merging
29 municipalities.
30 (5) The number of wards, if any, into which the
19870S0136B1228 - 37 -
1 consolidated or merged municipality will be divided for the
2 purpose of electing all or some members of its governing
3 body.
4 (6) Terms for:
5 (i) The disposition of existing assets of each
6 municipality.
7 (ii) The liquidation of existing indebtedness of
8 each municipality.
9 (iii) The assumption, assignment or disposition of
10 existing liabilities of each municipality, either
11 jointly, separately or in certain defined proportions, by
12 separate rates of taxation within each of the constituent
13 municipalities until consolidation or merger becomes
14 effective pursuant to section 407.
15 (iv) The implementation of a legally consistent
16 uniform tax system throughout the consolidated or merged
17 municipality which provides the revenue necessary to fund
18 required municipal services.
19 (7) The governmental organization of the consolidated or
20 merged municipality insofar as it concerns elected officers.
21 (8) A transitional plan and schedule applicable to
22 elected officers. The transitional plan shall provide for the
23 abolition of the elected offices of each component
24 municipality and the termination of the terms of office of
25 the elected officials of each municipality and for the
26 election of the first officers of the consolidated or merged
27 municipality so that election and tenure shall conform to
28 those in other municipalities of the same kind and class in
29 the Commonwealth with properly staggered terms where required
30 or desired.
19870S0136B1228 - 38 -
1 (9) The common administration and enforcement of
2 ordinances enforced uniformly within the consolidated or
3 merged municipality.
4 Section 404. Initiative of electors.
5 (a) General rule.--In order for consolidation or merger
6 proceedings to be initiated by petition of electors, petitions
7 containing signatures of at least 5% of the electors voting for
8 the Office of Governor in the last gubernatorial general
9 election in each municipality proposed to be consolidated or
10 merged shall be filed with the county board of elections of the
11 county in which the municipality, or the greater portion of its
12 territory, is located.
13 (b) Notice to governing bodies affected.--When election
14 officials find that a petition is in proper order, they shall
15 send copies of the initiative petition without the signatures
16 thereon to the governing bodies of each of the municipalities
17 affected by the proposed consolidation or merger.
18 (c) Contents.--A petition shall set forth:
19 (1) The name of the municipality from which the signers
20 of the petition were obtained.
21 (2) The names of the municipalities proposed to be
22 consolidated or merged.
23 (3) The name of the consolidated or merged municipality.
24 (4) The type and class of the consolidated or merged
25 municipality.
26 (5) Whether the consolidated or merged municipality
27 shall be governed solely by the code and other general laws
28 applicable to the kind and class of the consolidated or
29 merged municipality, or whether it shall be governed by a
30 home rule charter or an optional plan of government
19870S0136B1228 - 39 -
1 previously adopted by one of the consolidating or merging
2 municipalities.
3 (6) The number of wards, if any, into which the
4 consolidated or merged municipality will be divided for the
5 purpose of electing all or some members of its governing
6 body.
7 (d) Filing of petition.--The consolidation or merger
8 petition shall be filed with the election officials not later
9 than the 13th Tuesday prior to the next primary, municipal or
10 general election. The petition and proceedings therein shall be
11 in the manner and subject to the provisions of the election laws
12 which relate to the signing, filing and adjudication of
13 nomination petitions insofar as such provisions are applicable,
14 except that no referendum petition shall be signed or circulated
15 prior to the 20th Tuesday before the election, nor later than
16 the 13th Tuesday before the election.
17 Section 405. Conduct of referenda.
18 (a) Duty to place on ballot.--Following initiation of
19 proceedings for consolidation or merger by the procedures set
20 forth either in section 403 or 404, the question of
21 consolidation or merger shall be placed before the electors of
22 each of the municipalities proposed to be consolidated or
23 merged. A referendum shall be held at the first primary,
24 municipal or general election after either:
25 (1) the date of the general agreement entered into under
26 the provisions of section 403; or
27 (2) the date of filing of the petition filed under the
28 provisions of section 404.
29 (b) Approval.--Consolidation or merger shall not be
30 effective unless the referendum question is approved by a
19870S0136B1228 - 40 -
1 majority of the electors voting in each of the municipalities in
2 which the referendum is held. If in any one of the
3 municipalities in which the referendum is held a majority in
4 favor of consolidation or merger does not result, the referendum
5 shall fail and consolidation or merger shall not take place. The
6 question described in the consolidation or merger proposal shall
7 not be voted on again for a period of five years.
8 Section 406. Consolidation or merger agreement.
9 (a) Form.--Upon favorable action by the electorate on
10 consolidation or merger, in cases where consolidation or merger
11 was initiated otherwise than by joint agreement of municipal
12 governing bodies under section 403, the governing bodies of the
13 municipalities to be consolidated or merged shall meet within 60
14 days after the certification of the favorable vote and shall
15 make a consolidation or merger agreement, as follows:
16 (1) If the governing body, or part of the governing
17 body, of the consolidated or merged municipality is to be
18 elected on a ward basis, the agreement shall set forth the
19 ward boundaries and the ward designation, by number, and the
20 number of members of the municipal governing body to be
21 elected from each ward.
22 (2) The agreement shall set forth terms for:
23 (i) The disposition of the existing assets of each
24 municipality.
25 (ii) The liquidation of the existing indebtedness of
26 each municipality.
27 (iii) The assumption, assignment, and disposition of
28 the existing liabilities of each municipality, either
29 jointly, separately or in certain defined proportions, by
30 separate rates of taxation within each of the constituent
19870S0136B1228 - 41 -
1 municipalities until consolidation or merger becomes
2 effective pursuant to section 407.
3 (3) The agreement shall set forth the governmental
4 organization of the consolidated or merged municipality,
5 insofar as it concerns elected officers, and shall contain a
6 transitional plan and schedule applicable to elected
7 officers. The agreement shall provide for the abolition of
8 elected offices and for the termination of the terms of
9 office of elected officers of each municipality being merged
10 or consolidated, and the election of the first officers of
11 the consolidated or merged municipality so that election and
12 tenure shall conform to those in other municipalities of the
13 same kind and class in the Commonwealth, with properly
14 staggered terms, where required or desired.
15 (4) The agreement shall provide for common
16 administration and enforcement of ordinances to be enforced
17 uniformly within the consolidated or merged municipality.
18 (5) The agreement shall also provide, consistent with
19 exiting law, for the implementation of an uniform tax system
20 throughout the consolidated or merged municipality which
21 shall provide the revenue necessary to fund required
22 municipal services.
23 (b) Filing.--A copy of the consolidation or merger agreement
24 shall be filed with the Department of Community Affairs, the
25 Department of Transportation, the Governor's Office of Policy
26 Development or its successor, the Department of Education, State
27 Tax Equalization Board, the Legislative Reapportionment
28 Commission and the court of common pleas and the board of county
29 commissioners of the county or counties in which municipalities
30 affected are located.
19870S0136B1228 - 42 -
1 Section 407. Effectuation of consolidation or merger.
2 Municipalities consolidated or merged shall continue to be
3 governed as before consolidation or merger until the first
4 Monday of January following the municipal election next
5 succeeding the election at which consolidation or merger
6 referenda were held. At that municipal election, the necessary
7 officers of the consolidated or merged municipality shall be
8 elected in accordance with the terms of the general law
9 affecting municipalities of the kind or class of the
10 consolidated or merged municipality, or, in case of a
11 consolidated or merged municipality operating under a home rule
12 charter or optional plan of government, in accordance with the
13 charter or optional plan or with general law affecting home rule
14 or optional plan municipalities, as applicable. The officers
15 elected at that municipal election shall be elected for terms of
16 office under the plan and schedule set forth in the
17 consolidation or merger agreement authorized by section 403 or
18 406, as the case may be. They shall take office as officers of
19 the consolidated or merged municipality on the first Monday of
20 January following the municipal election at which they were
21 elected, and thereupon, the consolidated or merged municipality
22 shall begin to function and the former municipalities
23 consolidated or merged into it shall be abolished.
24 Section 408. Collective bargaining agreements; furlough of
25 employees; disputes.
26 (a) Collective bargaining contracts, agreements or
27 arbitration awards.--A collective bargaining agreement or
28 contract in existence in a municipality or an arbitration award
29 in effect in a municipality prior to a consolidation or merger
30 shall remain effective after consolidation or merger until the
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1 contract, agreements, or awards expire. After the expiration of
2 the contracts, agreements or awards, a subsequent collective
3 bargaining agreement, contract or award shall not impair the
4 implementation of a plan adopted pursuant to this act.
5 (b) Reduction in existing work force.--Subsequent to
6 consolidation or merger, the consolidated or merged municipality
7 may, in accordance with existing contracts or arbitration award
8 provisions and consistent with applicable laws, reduce the
9 number of uniformed and nonuniformed employees to avoid
10 overstaffing and duplication of positions in the consolidated or
11 merged municipality. If a consolidated or merged municipality
12 determines in its discretion that it is necessary to increase
13 the number of uniformed or nonuniformed employees, employees of
14 the constituent municipalities shall be reinstated in the order
15 of their seniority if they had been previously furloughed.
16 (c) Disputes.--The Pennsylvania Labor Relations Board shall
17 have jurisdiction to determine labor disputes or controversies,
18 except those arising out of interpretation or construction of a
19 collective bargaining agreement containing provision for binding
20 arbitration, between the consolidated or merged municipality and
21 its employees.
22 (d) Effect on existing law.--Nothing in this section shall
23 prohibit a consolidated or merged municipality from exercising
24 its powers and responsibilities pursuant to provisions of law
25 related to collective bargaining, including, but not limited to,
26 the act of June 24, 1968 (P.L.237, No.111), referred to as the
27 Policemen and Firemen Collective Bargaining Act, and the act of
28 July 23, 1970 (P.L.563, No.195), known as the Public Employe
29 Relations Act.
30 Section 409. Procedures.
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1 (a) Ordinance book.--After consolidation or merger becomes
2 effective, a new ordinance book shall be used by the
3 municipality and the first document to be recorded in it shall
4 be the consolidation or merger agreement.
5 (b) Ordinance codification.--No later than two years after
6 consolidation or merger goes into effect, codification of all
7 the ordinances of the municipality shall be completed. This
8 shall include tabulation or indexing of those ordinances of the
9 component municipalities that are of permanent effect in the
10 consolidated or merged municipality.
11 (c) Vesting of rights, privileges, property and
12 obligations.--All rights, privileges and franchises of each
13 component municipality and all property belonging to each
14 component municipality shall be vested in the consolidated or
15 merged municipality. The title to real estate vested in any of
16 those municipalities shall not revert or be in any way impaired
17 by reason of the consolidation or merger. All liens and rights
18 of creditors shall be preserved. Agreements and contracts shall
19 remain in force. Debts, liabilities and duties of each of the
20 municipalities shall be attached to the consolidated or merged
21 municipality and may be enforced against it.
22 SUBCHAPTER B
23 ECONOMIC ASSISTANCE
24 Section 421. Eligibility.
25 In the event a municipality has been determined to be
26 distressed pursuant to section 203(f) and has subsequently
27 consolidated or merged under provisions of this chapter, the
28 consolidated or merged municipality shall be eligible for
29 economic and community development assistance as provided in
30 section 422.
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1 Section 422. Priority.
2 Notwithstanding law to the contrary, if the electors of two
3 or more municipalities at least one of which has been determined
4 to be distressed pursuant to section 203(f), have voted to
5 approve the consolidation or merger of those municipalities, the
6 consolidated or merged municipality shall receive priority in
7 all economic and community development programs funded by the
8 Commonwealth. The secretary, upon notification of consolidation
9 or merger of such municipalities shall notify Commonwealth
10 agencies that the consolidated or merged municipality shall
11 receive priority in funding as provided in this subchapter.
12 NOTHING IN THIS SUBCHAPTER SHALL BE CONSTRUED TO GIVE PRIORITY <--
13 OVER ECONOMIC AND COMMUNITY DEVELOPMENT ASSISTANCE ALREADY
14 APPROVED AND ENCUMBERED BY THE COMMONWEALTH OR ITS AGENCIES TO
15 ANY OF THE FOLLOWING:
16 (1) A MUNICIPALITY WHICH IS NOT FINANCIALLY DISTRESSED
17 UNDER THIS ACT.
18 (2) A MUNICIPALITY WHICH HAS BEEN DECLARED DISTRESSED
19 UNDER SECTION 203(F) BUT HAS NOT BEEN SUBJECTED TO THE
20 FUNDING RESTRICTIONS UNDER SECTION 251 OR 264.
21 SECTION 423. LISTING OF ELIGIBLE MUNICIPALITIES.
22 A CONSOLIDATED OR MERGED MUNICIPALITY WHICH IS GIVEN PRIORITY
23 AS PROVIDED IN THIS SUBCHAPTER SHALL BE GIVEN PREFERENCE IN
24 ECONOMIC AND COMMUNITY DEVELOPMENT ASSISTANCE OVER OTHER
25 POTENTIAL ELIGIBLE MUNICIPALITIES ON THE BASIS OF THE DATE OF
26 NOTIFICATION BY THE SECRETARY TO COMMONWEALTH AGENCIES AS
27 PROVIDED IN SECTION 422.
28 CHAPTER 5
29 FUNDING
30 Section 501. Appropriation.
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1 The sum of $5,000,000, appropriated under section 210 of the
2 act of July 1, 1986 (P.L.1776, No.5A), known as the General
3 Appropriation Act of 1986, shall be used to carry out the
4 provisions of this act. The appropriation shall be distributed
5 as follows:
6 (1) $500,000 shall be used by the department for
7 administrative expenses necessary to carry out the provisions
8 of this act.
9 (2) $4,500,000 shall be used to provide grants and loans
10 to municipalities determined to be financially distressed
11 pursuant to this act.
12 CHAPTER 6
13 TECHNICAL PROVISIONS
14 Section 601. Repeals.
15 Section 2501-C(e) and (f) of the act of April 9, 1929
16 (P.L.177, No.175), known as The Administrative Code of 1929, are
17 repealed insofar as they are inconsistent with this act.
18 The act of June 11, 1935 (P.L.323, No.146), entitled "An act
19 designating the Department of Internal Affairs as the agency of
20 the Commonwealth to approve or disapprove petitions to courts,
21 and plans for the readjustment of debts of political
22 subdivisions, under the act of Congress relating to the
23 bankruptcy of political subdivisions; and defining the powers
24 and duties of said department in relation thereto," is repealed
25 insofar as it related to a municipality as defined in section
26 103 of this act.
27 Section 602. Expiration.
28 Section 203(a)(5) shall expire upon publication in the
29 Pennsylvania Bulletin of the notice required under section
30 121(g).
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1 Section 603. Effective date.
2 This act shall take effect in 60 days.
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