HOUSE AMENDED
        PRIOR PRINTER'S NOS. 1054, 1109, 1174         PRINTER'S NO. 1258

THE GENERAL ASSEMBLY OF PENNSYLVANIA


SENATE BILL

No. 864 Session of 1987


        INTRODUCED BY RHOADES, STAUFFER, ROCKS, REIBMAN, SHUMAKER,
           HELFRICK, FUMO, FISHER, LINCOLN, SHAFFER, MADIGAN, MUSTO,
           LEMMOND, PETERSON, ANDREZESKI, O'PAKE, WENGER, KELLEY,
           SALVATORE, ROMANELLI AND JONES, JUNE 1, 1987

        AS RE-REPORTED FROM COMMITTEE ON APPROPRIATIONS, HOUSE OF
           REPRESENTATIVES, AS AMENDED, JULY 1, 1987

                                     AN ACT

     1  Amending the act of July 2, 1984 (P.L.545, No.109), entitled "An  <--
     2     act establishing a loan program for capital development
     3     projects; providing for the use of funds made available under
     4     the Appalachian Regional Development Act of 1965 and the
     5     Public Works and Economic Development Act of 1965; providing
     6     for loans, loan guarantees and other programs for capital
     7     development projects of small businesses; creating the
     8     Capital Loan Fund; providing standards for and requirements
     9     of the program; and making appropriations," extending for two
    10     years the period during which Class III and apparel industry
    11     loans may be made; and authorizing apparel industry loans for
    12     technical assistance.
    13  EMPOWERING THE DEPARTMENT OF COMMUNITY AFFAIRS TO DECLARE         <--
    14     CERTAIN MUNICIPALITIES AS FINANCIALLY DISTRESSED; PROVIDING
    15     FOR THE RESTRUCTURING OF DEBT OF FINANCIALLY DISTRESSED
    16     MUNICIPALITIES; LIMITING THE ABILITY OF FINANCIALLY
    17     DISTRESSED MUNICIPALITIES TO OBTAIN GOVERNMENT FUNDING;
    18     AUTHORIZING MUNICIPALITIES TO PARTICIPATE IN FEDERAL DEBT
    19     ADJUSTMENT ACTIONS AND BANKRUPTCY ACTIONS UNDER CERTAIN
    20     CIRCUMSTANCES; AND PROVIDING FOR CONSOLIDATION OR MERGER OF
    21     CONTIGUOUS MUNICIPALITIES TO RELIEVE FINANCIAL DISTRESS.

    22                         TABLE OF CONTENTS
    23  CHAPTER 1.  GENERAL PROVISIONS
    24  SUBCHAPTER A.  PRELIMINARY PROVISIONS
    25  SECTION 101.  SHORT TITLE.


     1  SECTION 102.  PURPOSE AND LEGISLATIVE INTENT.
     2  SECTION 103.  DEFINITIONS.
     3  SUBCHAPTER B.  ADMINISTRATIVE PROVISIONS
     4  SECTION 121.  POWERS AND DUTIES OF DEPARTMENT.
     5  SECTION 122.  DUTIES OF COMMONWEALTH AGENCIES.
     6  SECTION 123.  POWERS AND DUTIES OF MUNICIPALITIES.
     7  SUBCHAPTER C.  JUDICIAL PROVISIONS
     8  SECTION 141.  JURISDICTION OF COURT OF COMMON PLEAS.
     9  CHAPTER 2.  MUNICIPAL FINANCIAL DISTRESS
    10  SUBCHAPTER A.  DETERMINATION OF MUNICIPAL FINANCIAL DISTRESS
    11  SECTION 201.  CRITERIA.
    12  SECTION 202.  STANDING TO PETITION FOR A DETERMINATION.
    13  SECTION 203.  PROCEDURE FOR DETERMINATION.
    14  SECTION 204.  COMMONWEALTH FUNDS.
    15  SUBCHAPTER B.  COORDINATOR
    16  SECTION 221.  DESIGNATION.
    17  SECTION 222.  ACCESS TO INFORMATION.
    18  SECTION 223.  PUBLIC AND PRIVATE MEETINGS.
    19  SECTION 224.  COORDINATOR BARRED FROM ELECTIVE OFFICE.
    20  SUBCHAPTER C.  COORDINATOR'S PLAN
    21  SECTION 241.  CONTENTS.
    22  SECTION 242.  PUBLICATION.
    23  SECTION 243.  REVIEW OF PLAN.
    24  SECTION 244.  REVISION.
    25  SECTION 245.  ADOPTION BY MUNICIPALITY.
    26  SECTION 246.  PREPARATION AND ACTION ON ALTERNATE PLAN.
    27  SECTION 247.  PLAN IMPLEMENTATION.
    28  SECTION 248.  FAILURE TO ADOPT OR IMPLEMENT PLAN.
    29  SECTION 249.  PLAN AMENDMENTS.
    30  SECTION 250.  DEBT PROVISIONS.
    19870S0864B1258                  - 2 -

     1  SECTION 251.  COMMONWEALTH AGENCY PAYMENTS OR ASSISTANCE.
     2  SECTION 252.  PLAN NOT AFFECTED BY CERTAIN COLLECTIVE
     3                 BARGAINING AGREEMENTS OR SETTLEMENTS.
     4  SECTION 253.  TERMINATION OF STATUS.
     5  SUBCHAPTER D.  APPLICATION OF FEDERAL LAW
     6  SECTION 261.  FILING MUNICIPAL DEBT ADJUSTMENT UNDER FEDERAL
     7                 LAW.
     8  SECTION 262.  SIGNIFICANCE AND DUTY ON FILING FEDERAL ACTION.
     9  SECTION 263.  APPLICATION OF THIS ACT DURING FEDERAL ACTION.
    10  SECTION 264.  SUSPENSION OF COMMONWEALTH FUNDING.
    11  CHAPTER 3.  EMERGENCY FINANCIAL AID FOR DISTRESSED
    12                 MUNICIPALITIES
    13  SECTION 301.  PROGRAM.
    14  SECTION 302.  GRANT AND LOAN PROCEDURE.
    15  SECTION 303.  LIMITATIONS.
    16  SECTION 304.  EXPIRATION.
    17  CHAPTER 4.  CONSOLIDATION OR MERGER OF ECONOMICALLY NONVIABLE
    18                 MUNICIPALITIES
    19  SUBCHAPTER A.  GENERAL PROVISIONS
    20  SECTION 401.  DETERMINATION.
    21  SECTION 402.  PROCEDURE FOR CONSOLIDATION OR MERGER.
    22  SECTION 403.  JOINT AGREEMENT OF GOVERNING BODIES.
    23  SECTION 404.  INITIATIVE OF ELECTORS.
    24  SECTION 405.  CONDUCT OF REFERENDA.
    25  SECTION 406.  CONSOLIDATION OR MERGER AGREEMENT.
    26  SECTION 407.  EFFECTUATION OF CONSOLIDATION OR MERGER.
    27  SECTION 408.  COLLECTIVE BARGAINING AGREEMENTS; FURLOUGH OF
    28                 EMPLOYEES; DISPUTES.
    29  SECTION 409.  PROCEDURES.
    30  SUBCHAPTER B.  ECONOMIC ASSISTANCE
    19870S0864B1258                  - 3 -

     1  SECTION 421.  ELIGIBILITY.
     2  SECTION 422.  PRIORITY.
     3  SECTION 423.  LISTING OF ELIGIBLE MUNICIPALITIES.
     4  CHAPTER 5.  FUNDING
     5  SECTION 501.  APPROPRIATION.
     6  CHAPTER 6.  TECHNICAL PROVISIONS
     7  SECTION 601.  REPEALS.
     8  SECTION 602.  EXPIRATION.
     9  SECTION 603.  EFFECTIVE DATE.
    10     The General Assembly of the Commonwealth of Pennsylvania
    11  hereby enacts as follows:
    12     Section 1.  Section 4(c)(5) and (d) of the act of July 2,      <--
    13  1984 (P.L.545, No.109), known as the Capital Loan Fund Act,
    14  amended or added December 20, 1985 (P.L.364, No.104), is amended
    15  to read:
    16  Section 4.  Eligibility for loans; terms and conditions.
    17     * * *
    18     (c)  Class III loans.--
    19         * * *
    20         (5)  No Class III loans or other Class III aid may be
    21     approved after June 30, [1987] 1989.
    22     (d)  Apparel industry loans.--
    23         (1)  The secretary may make advances from the fund,
    24     subject to the terms, conditions and restrictions provided
    25     under this act, to area loan organizations for the purpose of
    26     making loans to manufacturers of apparel products for capital
    27     development projects limited to the modernization, upgrading
    28     or replacement of equipment or technical assistance:
    29     Provided, however, That no loans shall be made which would do
    30     any of the following:
    19870S0864B1258                  - 4 -

     1             (i)  Cause, aid or assist in, directly or indirectly,
     2         the relocation of any business operations from one part
     3         of this Commonwealth to another, unless there is at least
     4         a 15% increase in net employment.
     5             (ii)  Supplant funding that is otherwise available
     6         expeditiously from private sector sources on commercially
     7         reasonable terms.
     8             (iii)  Be for the purpose of refinancing any portion
     9         of the total project cost or other existing loans or
    10         debt.
    11             (iv)  Be for the purpose of financing projects
    12         located outside the geographic boundaries of this
    13         Commonwealth.
    14             (v)  Be for the purpose of paying off a creditor
    15         which is inadequately secured and is in a position to
    16         sustain a loss.
    17             (vi)  Provide funds, directly or indirectly, for
    18         payment, distribution or as a loan to owners, partners or
    19         shareholders of the small business enterprise, except as
    20         ordinary compensation for services rendered.
    21             (vii)  Be for the purpose of repaying a debt owed to
    22         a small business investment company.
    23             (viii)  Provide funds for speculation in any kind of
    24         property, real or personal, tangible or intangible.
    25         (2)  Loans may be made in an amount not exceeding 50% of
    26     the total project cost, or $200,000, whichever is less:
    27     Provided, however, That no loans shall be made which will
    28     exceed $10,000 for each employment opportunity created or
    29     preserved by the project.
    30         (3)  All loans shall be secured by lien positions on
    19870S0864B1258                  - 5 -

     1     collateral at the highest level of priority which can
     2     accommodate the borrower's ability to raise sufficient debt
     3     and equity capital and shall be made for such period and
     4     shall bear such interest as may be determined by the area
     5     loan organization with the approval of the board: Provided,
     6     however, That:
     7             (i)  The term of any loan shall not exceed seven
     8         years.
     9             (ii)  The interest rate shall in no case be less than
    10         3%.
    11             (iii)  The secretary may defer interest and principal
    12         payments at his discretion.
    13         (4)  No apparel industry loans or other apparel industry
    14     aid may be approved after June 30, [1987] 1989.
    15         (5)  A manufacturer of apparel products is not
    16     disqualified from seeking Class I, II or III loans because of
    17     eligibility to apply for an apparel industry loan: Provided,
    18     however, That the loans approved shall not exceed in the
    19     aggregate 50% of total project cost, or $200,000, whichever
    20     is less.
    21     * * *
    22     Section 2.  This act shall be retroactive to June 30, 1987,
    23  if enacted after that date.
    24     Section 3.  This act shall take effect immediately.
    25                             CHAPTER 1                              <--
    26                         GENERAL PROVISIONS
    27                            SUBCHAPTER A
    28                       PRELIMINARY PROVISIONS
    29  SECTION 101.  SHORT TITLE.
    30     THIS ACT SHALL BE KNOWN AND MAY BE CITED AS THE FINANCIALLY
    19870S0864B1258                  - 6 -

     1  DISTRESSED MUNICIPALITIES ACT.
     2  SECTION 102.  PURPOSE AND LEGISLATIVE INTENT.
     3     (A)  POLICY.--IT IS HEREBY DECLARED TO BE A PUBLIC POLICY OF
     4  THE COMMONWEALTH TO FOSTER FISCAL INTEGRITY OF MUNICIPALITIES SO
     5  THAT THEY PROVIDE FOR THE HEALTH, SAFETY AND WELFARE OF THEIR
     6  CITIZENS; PAY DUE PRINCIPAL AND INTEREST ON THEIR DEBT
     7  OBLIGATIONS WHEN DUE; MEET FINANCIAL OBLIGATIONS TO THEIR
     8  EMPLOYEES, VENDORS AND SUPPLIERS; AND PROVIDE FOR PROPER
     9  FINANCIAL ACCOUNTING PROCEDURES, BUDGETING AND TAXING PRACTICES.
    10  THE FAILURE OF A MUNICIPALITY TO DO SO IS HEREBY DETERMINED TO
    11  AFFECT ADVERSELY THE HEALTH, SAFETY AND WELFARE NOT ONLY OF THE
    12  CITIZENS OF THE MUNICIPALITY BUT ALSO OF OTHER CITIZENS IN THIS
    13  COMMONWEALTH.
    14     (B)  LEGISLATIVE INTENT.--
    15         (1)  IT IS THE INTENT OF THE GENERAL ASSEMBLY TO:
    16             (I)  ENACT PROCEDURES AND PROVIDE POWERS AND
    17         GUIDELINES TO ENSURE FISCAL INTEGRITY OF MUNICIPALITIES
    18         WHILE LEAVING PRINCIPAL RESPONSIBILITY FOR CONDUCTING THE
    19         GOVERNMENTAL AFFAIRS OF A MUNICIPALITY, INCLUDING
    20         CHOOSING THE PRIORITIES FOR AND MANNER OF EXPENDITURES
    21         BASED ON AVAILABLE REVENUES, TO THE CHARGE OF ITS ELECTED
    22         OFFICIALS, CONSISTENT WITH THE PUBLIC POLICY SET FORTH IN
    23         THIS SECTION.
    24             (II)  ENACT PROCEDURES FOR THE ADJUSTMENT OF
    25         MUNICIPAL DEBT BY NEGOTIATED AGREEMENT WITH CREDITORS.
    26         (2)  THE GENERAL ASSEMBLY FURTHER RECOGNIZES THAT
    27     CHANGING AND DETERIORATING ECONOMIC CONDITIONS, DEVELOPING
    28     TECHNOLOGIES AND ATTENDANT UNEMPLOYMENT ERODE LOCAL TAX BASES
    29     AND THREATEN ESSENTIAL MUNICIPAL SERVICES. UNDER SUCH
    30     CIRCUMSTANCES, THE GENERAL ASSEMBLY BELIEVES THAT SUCH
    19870S0864B1258                  - 7 -

     1     DISTRESSED GOVERNMENTAL UNITS MAY NO LONGER BE VIABLE AND
     2     THAT THE CITIZENS OF THOSE COMMUNITIES SHOULD BE GRANTED THE
     3     OPPORTUNITY TO VOLUNTARILY CONSOLIDATE OR MERGE THEIR
     4     MUNICIPALITIES WITH OTHER MUNICIPALITIES IN AN EFFORT TO
     5     ALLOW MUNICIPAL BOUNDARIES TO REFLECT THE GEOGRAPHIC AND
     6     ECONOMIC REALITIES OF A DISTRESSED AREA, TO MERGE A COMMON
     7     COMMUNITY OF INTEREST, TO TAKE ADVANTAGE OF ECONOMIES OF
     8     SCALE IN PROVIDING SERVICES, AND TO CREATE AN EXPANDED
     9     REVENUE BASE TO PROVIDE NECESSARY PUBLIC SERVICES TO THE
    10     CITIZENS OF FINANCIALLY DISTRESSED MUNICIPALITIES.
    11  SECTION 103.  DEFINITIONS.
    12     THE FOLLOWING WORDS AND PHRASES WHEN USED IN THIS ACT SHALL
    13  HAVE THE MEANINGS GIVEN TO THEM IN THIS SECTION UNLESS THE
    14  CONTEXT CLEARLY INDICATES OTHERWISE:
    15     "BASIS OF ACCOUNTING."  REVENUES AND EXPENDITURES MAY BE
    16  RECOGNIZED ON THE CASH, MODIFIED ACCRUAL OR FULL ACCRUAL BASIS
    17  OF ACCOUNTING, PROVIDED THAT BASIS IS APPLIED CONSISTENTLY
    18  THROUGHOUT THE FISCAL PERIODS REPORTED FOR EVALUATION PURPOSES.
    19     "CHIEF EXECUTIVE OFFICER."  MAYOR IN A MAYOR-COUNCIL FORM OF
    20  GOVERNMENT OR MANAGER IN A COUNCIL-MANAGER FORM OF GOVERNMENT OF
    21  A CITY OPERATING UNDER AN OPTIONAL FORM OF GOVERNMENT PURSUANT
    22  TO THE ACT OF JULY 15, 1957 (P.L.901, NO.399), KNOWN AS THE
    23  OPTIONAL THIRD CLASS CITY CHARTER LAW; A MAYOR OF A CITY OF THE
    24  FIRST CLASS UNDER THE ACT OF APRIL 21, 1949 (P.L.665, NO.155),
    25  KNOWN AS THE FIRST CLASS CITY HOME RULE ACT; OR AN INDIVIDUAL
    26  SERVING IN SUCH CAPACITY AS DESIGNATED BY A HOME RULE CHARTER OR
    27  OPTIONAL PLAN PURSUANT TO THE ACT OF APRIL 13, 1972 (P.L.184,
    28  NO.62), KNOWN AS THE HOME RULE CHARTER AND OPTIONAL PLANS LAW.
    29     "CLAIM."  RIGHT TO PAYMENT, WHETHER OR NOT THE RIGHT IS
    30  REDUCED TO JUDGMENT, LIQUIDATED, UNLIQUIDATED, FIXED,
    19870S0864B1258                  - 8 -

     1  CONTINGENT, MATURED, UNMATURED, DISPUTED, UNDISPUTED, LEGAL,
     2  EQUITABLE, SECURED OR UNSECURED; OR RIGHT TO AN EQUITABLE REMEDY
     3  FOR BREACH OF PERFORMANCE IF THE BREACH GIVES RISE TO A RIGHT TO
     4  PAYMENT, WHETHER OR NOT THE RIGHT TO AN EQUITABLE REMEDY IS
     5  REDUCED TO JUDGMENT, FIXED, CONTINGENT, MATURED, UNMATURED,
     6  DISPUTED, UNDISPUTED, SECURED OR UNSECURED.
     7     "COMMONWEALTH AGENCY."  THE GOVERNOR AND THE DEPARTMENTS,
     8  BOARDS, COMMISSIONS, AUTHORITIES AND OTHER OFFICERS AND AGENCIES
     9  OF THIS COMMONWEALTH, WHETHER OR NOT SUBJECT TO THE POLICY
    10  SUPERVISION AND CONTROL OF THE GOVERNOR.
    11     "CONSOLIDATED OR MERGED MUNICIPALITY."  A MUNICIPAL ENTITY
    12  RESULTING FROM SUCCESSFUL CONSOLIDATION OR MERGER PROCEEDINGS
    13  UNDER SUBCHAPTER A OF CHAPTER 4.
    14     "CONSOLIDATION OR MERGER."  THE COMBINATION OF TWO OR MORE
    15  MUNICIPALITIES INTO ONE MUNICIPALITY.
    16     "CONTIGUOUS TERRITORY."  A TERRITORY OF WHICH A PORTION ABUTS
    17  THE BOUNDARY OF ANOTHER MUNICIPALITY, INCLUDING TERRITORY
    18  SEPARATED FROM THE EXACT BOUNDARY OF ANOTHER MUNICIPALITY BY A
    19  STREET, ROAD, RAILROAD OR HIGHWAY, OR BY A RIVER OR OTHER
    20  NATURAL OR ARTIFICIAL STREAM OF WATER.
    21     "CREDITOR."  AN INDIVIDUAL, PARTNERSHIP, CORPORATION,
    22  ASSOCIATION, ESTATE, TRUST, GOVERNMENTAL UNIT OR THE GOVERNING
    23  BOARD OF A PENSION FUND OF A MUNICIPALITY THAT HAS A CLAIM
    24  AGAINST A MUNICIPALITY.
    25     "DEFICIT."  THE EXCESS OF EXPENDITURES OVER REVENUES, STATED
    26  AS A PERCENTAGE OF REVENUE, DURING AN ACCOUNTING PERIOD. THIS
    27  CALCULATION SHALL INCLUDE ALL GOVERNMENTAL FUND TYPES AND ALL
    28  PROPRIETARY FUND TYPES, BUT SHALL EXCLUDE ALL FIDUCIARY FUND
    29  TYPES OF THE MUNICIPALITY.
    30     "DEPARTMENT."  THE DEPARTMENT OF COMMUNITY AFFAIRS OF THE
    19870S0864B1258                  - 9 -

     1  COMMONWEALTH.
     2     "ELECTION OFFICIALS."  THE COUNTY BOARDS OF ELECTION, EXCEPT
     3  IN A CITY OF THE FIRST CLASS WHERE "ELECTION OFFICIALS" MEANS
     4  THE CITY BOARD OF ELECTIONS.
     5     "EXPENDITURES."  REDUCTIONS IN FUND EQUITY, INCLUDING CURRENT
     6  OPERATING EXPENSES THAT REQUIRE THE USE OF FUND EQUITY, DEBT
     7  SERVICE AND CAPITAL OUTLAYS. THE TERM SHALL NOT INCLUDE
     8  INTERFUND TRANSFERS.
     9     "FUND EQUITY."  EXCESS OF ASSETS OF A FUND OVER ITS
    10  LIABILITIES.
    11     "GOVERNING BODY."  THE COUNCIL IN CITIES, BOROUGHS AND
    12  INCORPORATED TOWNS; THE BOARD OF COMMISSIONERS IN COUNTIES; THE
    13  BOARD OF COMMISSIONERS IN TOWNSHIPS OF THE FIRST CLASS; THE
    14  BOARD OF SUPERVISORS IN TOWNSHIPS OF THE SECOND CLASS, OR THE
    15  LEGISLATIVE POLICY-MAKING BODY IN HOME RULE MUNICIPALITIES.
    16     "INITIATIVE."  THE FILING WITH APPLICABLE ELECTION OFFICIALS
    17  OF A PETITION CONTAINING A PROPOSAL FOR A REFERENDUM TO BE
    18  PLACED ON THE BALLOT OF THE NEXT ELECTION. THE PETITION SHALL
    19  BE:
    20         (1)  FILED NOT LATER THAN THE 13TH TUESDAY PRIOR TO THE
    21     NEXT ELECTION IN WHICH IT WILL APPEAR ON THE BALLOT.
    22         (2)  SIGNED BY VOTERS COMPRISING 5% OF THE PERSONS VOTING
    23     FOR THE OFFICE OF GOVERNOR IN THE LAST GUBERNATORIAL GENERAL
    24     ELECTION IN THE MUNICIPALITY WHERE THE PROPOSAL WILL APPEAR
    25     ON THE BALLOT.
    26         (3)  PLACED ON THE BALLOT BY ELECTION OFFICIALS IN A
    27     MANNER FAIRLY REPRESENTING THE CONTENT OF THE PETITION FOR
    28     DECISION BY REFERENDUM AT SAID ELECTION.
    29         (4)  SUBMITTED NOT MORE THAN ONCE IN FIVE YEARS.
    30     "MATURED CLAIM."  A CLAIM THAT HAS BEEN REDUCED TO JUDGMENT
    19870S0864B1258                 - 10 -

     1  OR LIQUIDATED IN AMOUNT BY AGREEMENT FOR A PERIOD OF 90 DAYS
     2  PRIOR TO THE FILING OF A PETITION TO COMMENCE FISCAL DISTRESS
     3  PROCEEDINGS UNDER THIS ACT.
     4     "MUNICIPAL RECORD."  A FINANCIAL RECORD AND DOCUMENT OF A
     5  MUNICIPALITY OR OF AN AUTHORITY INCORPORATED BY A MUNICIPALITY,
     6  EXCLUDING CONFIDENTIAL INFORMATION RELATING TO PERSONNEL MATTERS
     7  AND MATTERS RELATING TO THE INITIATION AND CONDUCT OF
     8  INVESTIGATIONS OF VIOLATIONS OF LAW.
     9     "MUNICIPALITY."  EVERY COUNTY, CITY, BOROUGH, INCORPORATED
    10  TOWN, TOWNSHIP AND HOME RULE MUNICIPALITY.
    11     "REFERENDUM."  PLACEMENT OF A QUESTION INSERTED ON THE
    12  BALLOT, BY INITIATIVE OR OTHERWISE, BY A MAJORITY VOTE OF THE
    13  ELECTORS VOTING THEREON.
    14     "REVENUES."  ADDITIONS TO FUND EQUITY OTHER THAN FROM
    15  INTERFUND TRANSFERS, PROCEEDS OF DEBT AND PROCEEDS OF
    16  DISPOSITION OF GENERAL FIXED ASSETS.
    17     "SECRETARY."  THE SECRETARY OF COMMUNITY AFFAIRS OF THE
    18  COMMONWEALTH.
    19                            SUBCHAPTER B
    20                     ADMINISTRATIVE PROVISIONS
    21  SECTION 121.  POWERS AND DUTIES OF DEPARTMENT.
    22     (A)  COMPILE FINANCIAL DATA.--
    23         (1)  A POWER AND DUTY OF THE DEPARTMENT SHALL BE TO
    24     MAINTAIN ACCURATE AND CURRENT INFORMATION AND DATA ON THE
    25     FISCAL STATUS OF MUNICIPALITIES TO DETERMINE IF CRITERIA SET
    26     FORTH IN SECTION 201 EXIST AND, IF SO, WHETHER THE EXISTENCE
    27     OF THOSE FACTORS VALIDLY INDICATES FISCAL DISTRESS.
    28         (2)  IN COMPILING THE INFORMATION AND DATA, THE
    29     DEPARTMENT SHALL MAIL, BEFORE JANUARY 1 OF EACH YEAR, A
    30     SURVEY OF FINANCIAL CONDITION FORM TO EACH MUNICIPALITY
    19870S0864B1258                 - 11 -

     1     APPLICABLE TO THE MUNICIPALITY'S PRIOR FISCAL YEAR.
     2             (I)  THE SURVEY SHALL SEEK INFORMATION NECESSARY TO
     3         DETERMINE THE FISCAL STATUS OF A MUNICIPALITY, SHALL BE
     4         CONCISE TO FACILITATE PROMPT RESPONSE AND SHALL CONTAIN
     5         AN ATTESTATION CLAUSE TO BE SIGNED BY THE PRESIDING
     6         OFFICER OF THE MUNICIPALITY'S GOVERNING BODY. THE ACTUAL
     7         SURVEY FORM SHALL NOT EXCEED TWO PAGES IN LENGTH.
     8             (II)  THE SURVEY SHALL BE PROVIDED TO THE MUNICIPAL
     9         CLERK OR MUNICIPAL SECRETARY ALONG WITH TAX INFORMATION
    10         FORMS IN ACCORDANCE WITH LAW.
    11             (III)  THE SURVEY SHALL INCLUDE INFORMATION BASED ON
    12         THE CRITERIA SPECIFIED IN SECTION 201.
    13             (IV)  THE SURVEY SHALL INCLUDE INFORMATION RELATING
    14         TO THE BASIS OF ACCOUNTING UTILIZED BY MUNICIPALITIES.
    15     (B)  ASSESS DATA.--A POWER AND DUTY OF THE DEPARTMENT SHALL
    16  BE TO APPLY THE CRITERIA OF SECTION 201 TO DATA AND INFORMATION
    17  ON THE FISCAL STATUS OF MUNICIPALITIES TO ASSESS THE VALIDITY
    18  AND APPLICABILITY OF AN INDICATION OF MUNICIPAL FINANCIAL
    19  DISTRESS. IN ASSESSING VALIDITY AND APPLICABILITY, THE
    20  DEPARTMENT SHALL UNDERTAKE A REVIEW PROCESS INCLUDING, BUT NOT
    21  LIMITED TO, CONSULTATION, CORRESPONDENCE AND VISITS WITH A
    22  MUNICIPALITY WHICH APPEARS TO BE FINANCIALLY DISTRESSED,
    23  NOTWITHSTANDING THE PROVISIONS OF SECTION 2501-C(E) AND (F) OF
    24  THE ACT OF APRIL 9, 1929 (P.L.177, NO.175), KNOWN AS THE
    25  ADMINISTRATIVE CODE OF 1929, WHICH LIMITS DEPARTMENT
    26  INTERVENTION TO INCIDENCES WHEN SUCH IS REQUESTED BY THE
    27  MUNICIPALITY. IF THE DEPARTMENT ASSESSES THAT A MUNICIPALITY
    28  NEEDS ASSISTANCE TO CORRECT MINOR FISCAL PROBLEMS, THE
    29  DEPARTMENT SHALL OFFER APPROPRIATE RECOMMENDATIONS. IF THE
    30  MUNICIPALITY ADOPTS THOSE RECOMMENDATIONS, THE DEPARTMENT NEED
    19870S0864B1258                 - 12 -

     1  TAKE NO FURTHER ACTION.
     2     (C)  NOTIFY AGENCIES OF DETERMINATION.--UPON THE MAKING OF A
     3  DETERMINATION BY THE SECRETARY THAT A MUNICIPALITY IS DISTRESSED
     4  PURSUANT TO SECTION 203(F), THE DEPARTMENT SHALL IMMEDIATELY
     5  NOTIFY THE HEADS OF ALL COMMONWEALTH AGENCIES OF THE
     6  DETERMINATION.
     7     (D)  ACT AS ANALYZER OF MUNICIPAL REPORTS.--A POWER AND DUTY
     8  OF THE DEPARTMENT SHALL BE TO ACT AS THE COMMONWEALTH ANALYZER
     9  FOR RELEVANT REPORTS, DATA AND INFORMATION REQUIRED BY LAW TO BE
    10  FILED BY MUNICIPALITIES WITH ANY COMMONWEALTH AGENCY WHEN SUCH
    11  REPORTS, DATA AND INFORMATION DIRECTLY RELATE TO THE FINANCIAL
    12  CONDITIONS OF MUNICIPALITIES. THE DEPARTMENT SHALL, IN
    13  CONSULTATION WITH EVERY COMMONWEALTH AGENCY, DETERMINE WHICH
    14  REPORTS, DATA AND INFORMATION RELATE TO THE FISCAL CONDITION OF
    15  MUNICIPALITIES. UPON AN INDICATION OF DISTRESS IN A MUNICIPALITY
    16  THROUGH INFORMATION AVAILABLE TO THE DEPARTMENT, THE DEPARTMENT
    17  SHALL REQUEST DATA, REPORTS AND INFORMATION FROM ALL
    18  COMMONWEALTH AGENCIES TO ASSIST THE DEPARTMENT TO SUBSTANTIATE A
    19  POSSIBLE DISTRESS STATUS OF A MUNICIPALITY.
    20     (E)  FURNISH PROGRAM DATA TO MUNICIPALITY.--UPON RECEIPT OF
    21  INFORMATION FORWARDED TO THE DEPARTMENT BY EACH COMMONWEALTH
    22  AGENCY PURSUANT TO SECTION 122(A), THE DEPARTMENT SHALL FURNISH
    23  THIS INFORMATION TO THE DISTRESSED MUNICIPALITY COORDINATOR FOR
    24  POSSIBLE INCLUSION OF SUCH INFORMATION INTO THE PLAN DEVELOPED
    25  BY THE COORDINATOR IN ACCORDANCE WITH SUBCHAPTER C OF CHAPTER 2.
    26     (F)  DEVELOP EARLY WARNING SYSTEM.--IN CONJUNCTION WITH
    27  ASSESSING A MUNICIPALITY'S CURRENT FISCAL STABILITY UNDER
    28  SUBSECTIONS (A) AND (B) AND SECTION 201, THE DEPARTMENT SHALL
    29  DEVELOP AN EARLY WARNING SYSTEM UTILIZING NECESSARY FISCAL AND
    30  SOCIOECONOMIC VARIABLES TO IDENTIFY MUNICIPAL FINANCIAL
    19870S0864B1258                 - 13 -

     1  EMERGENCIES BEFORE THEY REACH CRISIS PROPORTIONS AND TO NOTIFY
     2  AN AFFECTED MUNICIPALITY APPROPRIATELY. THE DEPARTMENT SHALL BE
     3  RESPONSIBLE FOR TESTING THE VALIDITY AND RELIABILITY OF THESE
     4  VARIABLES AND SHALL CONTINUOUSLY MONITOR THEM TO ASSURE THEIR
     5  EFFECTIVENESS. IN DEVELOPING AN EARLY WARNING SYSTEM, THE
     6  DEPARTMENT MAY EMPLOY OR CONTRACT WITH MUNICIPAL FISCAL
     7  CONSULTANTS AS DEEMED NECESSARY TO EXECUTE THE PROVISIONS OF
     8  THIS SUBSECTION. NOTICE SHALL BE PUBLISHED IN THE PENNSYLVANIA
     9  BULLETIN THAT THE EARLY WARNING SYSTEM HAS BEEN DEVELOPED AND
    10  THE SYSTEM MAY NOT BECOME OPERATIONAL UNTIL THE PUBLICATION OF
    11  THE NOTICE.
    12     (G)  DISTRIBUTE GRANTS AND LOANS.--THE DEPARTMENT SHALL
    13  DISTRIBUTE GRANTS AND LOANS TO FINANCIALLY DISTRESSED
    14  MUNICIPALITIES IN ACCORDANCE WITH CHAPTER 3.
    15     (H)  PROMULGATE RULES AND REGULATIONS.--THE DEPARTMENT SHALL
    16  PROMULGATE RULES AND REGULATIONS NECESSARY TO IMPLEMENT THE
    17  PROVISIONS OF THIS ACT.
    18  SECTION 122.  DUTIES OF COMMONWEALTH AGENCIES.
    19     (A)  REVIEW PROGRAMS.--AFTER THE SECRETARY MAKES A
    20  DETERMINATION THAT A MUNICIPALITY IS DISTRESSED AND THE
    21  DEPARTMENT NOTIFIES COMMONWEALTH AGENCIES OF THE SECRETARY'S
    22  DETERMINATION PURSUANT TO SECTION 121(C), EACH AGENCY SHALL
    23  REVIEW ALL MATTERS AND PROGRAMS PENDING, UNDERWAY OR ABOUT TO BE
    24  COMMENCED OR POSSIBLE PROGRAMS CONCERNING THE DISTRESSED
    25  MUNICIPALITY. A RECOMMENDED ACTION WHICH IS WITHIN THE AUTHORITY
    26  AND BUDGET OF A COMMONWEALTH AGENCY AND WHICH, IN THE JUDGMENT
    27  OF THE HEAD OF THE AGENCY, WILL HELP TO IMPROVE THE DISTRESSED
    28  MUNICIPALITY'S FINANCIAL SITUATION SHALL BE REPORTED TO THE
    29  DEPARTMENT.
    30     (B)  TRANSFER DOCUMENTED INFORMATION.--UPON REQUEST OF THE
    19870S0864B1258                 - 14 -

     1  DEPARTMENT, EACH COMMONWEALTH AGENCY SHALL FORWARD TO THE
     2  DEPARTMENT ALL DOCUMENTED REPORTS, DATA AND OTHER INFORMATION
     3  REFERRED TO IN SECTION 121(D) WITHIN 30 DAYS OF RECEIPT.
     4  SECTION 123.  POWERS AND DUTIES OF MUNICIPALITIES.
     5     (A)  FILE COMPLETED SURVEY.--ON OR BEFORE MARCH 15 OF EACH
     6  YEAR, EVERY MUNICIPALITY SHALL RETURN TO THE DEPARTMENT A
     7  COMPLETED SURVEY OF FINANCIAL CONDITIONS REFERRED TO IN SECTION
     8  121(A). NO MUNICIPALITY SHALL RECEIVE ITS ALLOTED PAYMENTS
     9  PURSUANT TO THE ACT OF JUNE 1, 1956 (1955 P.L.1944, NO.655),
    10  REFERRED TO AS THE LIQUID FUELS TAX MUNICIPAL ALLOCATION LAW,
    11  UNLESS IT COMPLIES WITH THE PROVISIONS OF THIS SECTION,
    12  NOTWITHSTANDING A PROVISION OF LAW TO THE CONTRARY, AND THE
    13  DEPARTMENT OF TRANSPORTATION MAY NOT DISBURSE FUNDS TO A
    14  MUNICIPALITY PURSUANT TO THE LIQUID FUELS TAX MUNICIPAL
    15  ALLOCATION LAW UNTIL NOTIFIED BY THE DEPARTMENT THAT THE
    16  MUNICIPALITY HAS COMPLIED WITH THE PROVISIONS OF THIS SECTION.
    17     (B)  FILE APPLICATIONS FOR GRANTS AND LOANS.--A FINANCIALLY
    18  DISTRESSED MUNICIPALITY MAY APPLY TO THE SECRETARY FOR EMERGENCY
    19  FINANCIAL AID IN THE FORM OF A GRANT OR LOAN PURSUANT TO CHAPTER
    20  3.
    21     (C)  RIGHT TO PETITION COURT FOR TAX INCREASE.--AFTER A
    22  MUNICIPALITY HAS ADOPTED A PLAN UNDER SUBCHAPTER C OF CHAPTER 2,
    23  IT MAY PETITION THE COURT OF COMMON PLEAS OF THE COUNTY IN WHICH
    24  THE MUNICIPALITY IS LOCATED TO INCREASE ITS RATES OF TAXATION
    25  FOR EARNED INCOME, REAL PROPERTY, OR BOTH, BEYOND MAXIMUM RATES
    26  PROVIDED BY LAW. IF A TAX INCREASE ABOVE EXISTING LIMITS IS
    27  GRANTED BY THE COURTS, THE INCREASE SHALL BE EFFECTIVE FOR A
    28  PERIOD OF ONE YEAR FROM THE DATE A FINAL PLAN IS ADOPTED BY THE
    29  GOVERNING BODY PURSUANT TO SECTION 245. SUBSEQUENT INCREASES IN
    30  RATES OF TAXATION MAY BE GRANTED BY THE COURT UPON ANNUAL
    19870S0864B1258                 - 15 -

     1  PETITION OF THE MUNICIPALITY. THE ADDITIONAL AMOUNT OF TAXES
     2  RESULTING FROM THE PETITION SHALL NOT BE SUBJECT TO SHARING WITH
     3  A SCHOOL DISTRICT.
     4                            SUBCHAPTER C
     5                        JUDICIAL PROVISIONS
     6  SECTION 141.  JURISDICTION OF COURT OF COMMON PLEAS.
     7     THE COURT OF COMMON PLEAS OF EACH COUNTY SHALL HAVE
     8  JURISDICTION TO HEAR A PETITION FILED BY A MUNICIPALITY WHICH
     9  HAS ADOPTED A FINAL PLAN PURSUANT TO SUBCHAPTER C OF CHAPTER 2
    10  TO INCREASE RATES OF TAXATION FOR EARNED INCOME, REAL PROPERTY,
    11  OR BOTH, BEYOND MAXIMUM RATES PROVIDED BY LAW. THE COURT MAY
    12  EXTEND ANNUALLY THE INCREASED TAXING POWERS OF THE MUNICIPALITY
    13  UNTIL THE TERMINATION DATE OF THE PLAN ADOPTED BY THE
    14  MUNICIPALITY PURSUANT TO CHAPTER 2.
    15                             CHAPTER 2
    16                    MUNICIPAL FINANCIAL DISTRESS
    17                            SUBCHAPTER A
    18           DETERMINATION OF MUNICIPAL FINANCIAL DISTRESS
    19  SECTION 201.  CRITERIA.
    20     THE EVALUATION OF A MUNICIPALITY'S FINANCIAL STABILITY BY THE
    21  DEPARTMENT UNDER SECTION 121 SHALL INCLUDE EACH OF THE FOLLOWING
    22  CRITERIA. IF AT LEAST ONE CRITERION IS PRESENT AND THE
    23  DEPARTMENT ASSESSES PURSUANT TO SECTION 121(B) THAT IT IS A
    24  VALID INDICATION OF MUNICIPAL FINANCIAL DISTRESS, THEN THE
    25  DEPARTMENT SHALL EXERCISE ITS POWERS AND DUTIES PURSUANT TO
    26  SECTION 121.
    27         (1)  THE MUNICIPALITY HAS MAINTAINED A DEFICIT OVER A
    28     THREE-YEAR PERIOD, WITH A DEFICIT OF 1% OR MORE IN EACH OF
    29     THE PREVIOUS FISCAL YEARS.
    30         (2)  THE MUNICIPALITY'S EXPENDITURES HAVE EXCEEDED
    19870S0864B1258                 - 16 -

     1     REVENUES FOR A PERIOD OF THREE YEARS OR MORE.
     2         (3)  THE MUNICIPALITY HAS DEFAULTED IN PAYMENT OF
     3     PRINCIPAL OR INTEREST ON ANY OF ITS BONDS OR NOTES OR IN
     4     PAYMENT OF RENTALS DUE ANY AUTHORITY.
     5         (4)  THE MUNICIPALITY HAS MISSED A PAYROLL FOR 30 DAYS.
     6         (5)  THE MUNICIPALITY HAS FAILED TO MAKE REQUIRED
     7     PAYMENTS TO JUDGMENT CREDITORS FOR 30 DAYS BEYOND THE DATE OF
     8     THE RECORDING OF THE JUDGMENT.
     9         (6)  THE MUNICIPALITY, FOR A PERIOD OF AT LEAST 30 DAYS
    10     BEYOND THE DUE DATE, HAS FAILED TO FORWARD TAXES WITHHELD ON
    11     THE INCOME OF EMPLOYEES OR HAS FAILED TO TRANSFER EMPLOYER OR
    12     EMPLOYEE CONTRIBUTIONS FOR SOCIAL SECURITY.
    13         (7)  THE MUNICIPALITY HAS ACCUMULATED AND HAS OPERATED
    14     FOR EACH OF TWO SUCCESSIVE YEARS A DEFICIT EQUAL TO 5% OR
    15     MORE OF ITS REVENUES.
    16         (8)  THE MUNICIPALITY HAS FAILED TO MAKE THE BUDGETED
    17     PAYMENT OF ITS MINIMUM MUNICIPAL OBLIGATION AS REQUIRED BY
    18     SECTION 302 OF THE ACT OF DECEMBER 18, 1984 (P.L.1005,
    19     NO.205), KNOWN AS THE MUNICIPAL PENSION PLAN FUNDING STANDARD
    20     AND RECOVERY ACT, WITH RESPECT TO A PENSION FUND DURING THE
    21     FISCAL YEAR FOR WHICH THE PAYMENT WAS BUDGETED AND HAS FAILED
    22     TO TAKE ACTION WITHIN THAT TIME PERIOD TO MAKE REQUIRED
    23     PAYMENTS.
    24         (9)  A MUNICIPALITY HAS SOUGHT TO NEGOTIATE RESOLUTION OR
    25     ADJUSTMENT OF A CLAIM IN EXCESS OF 30% AGAINST A FUND OR
    26     BUDGET AND HAS FAILED TO REACH AN AGREEMENT WITH CREDITORS.
    27         (10)  A MUNICIPALITY HAS FILED A MUNICIPAL DEBT
    28     READJUSTMENT PLAN PURSUANT TO CHAPTER 9 OF THE BANKRUPTCY
    29     CODE (11 U.S.C. § 901 ET SEQ.).
    30         (11)  THE MUNICIPALITY HAS EXPERIENCED A DECREASE IN A
    19870S0864B1258                 - 17 -

     1     QUANTIFIED LEVEL OF MUNICIPAL SERVICE FROM THE PRECEDING
     2     FISCAL YEAR WHICH HAS RESULTED FROM THE MUNICIPALITY REACHING
     3     ITS LEGAL LIMIT IN LEVYING REAL ESTATE TAXES FOR GENERAL
     4     PURPOSES. FOR DETERMINING LEVELS OF MUNICIPAL SERVICE FOR THE
     5     YEAR 1987, THE DEPARTMENT SHALL UTILIZE ANNUAL STATISTICAL
     6     DATA SINCE THE YEAR 1982 TO DETERMINE A PATTERN OF DECREASE
     7     IN DELIVERY OF MUNICIPAL SERVICES SINCE 1982.
     8  SECTION 202.  STANDING TO PETITION FOR A DETERMINATION.
     9     THE FOLLOWING HAVE STANDING TO SEEK A DETERMINATION OF
    10  MUNICIPAL FINANCIAL DISTRESS FROM THE SECRETARY:
    11         (1)  THE DEPARTMENT ITSELF, IF, SUBSEQUENT TO ITS REVIEW
    12     AND ANALYSIS UNDER SECTIONS 121 AND 201, IT CONCLUDES THAT A
    13     MUNICIPALITY IS SUBSTANTIALLY IN A CONDITION OF FINANCIAL
    14     DISTRESS.
    15         (2)  THE GOVERNING BODY OF THE MUNICIPALITY UPON PASSING
    16     A RESOLUTION BY A MAJORITY VOTE OF THE GOVERNING BODY AFTER A
    17     SPECIAL PUBLIC MEETING DULY ADVERTISED AS PROVIDED BY LAW.
    18         (3)  A CREDITOR WITH A MATURED CLAIM TO WHOM THE
    19     MUNICIPALITY OWES $10,000 OR MORE, IF THE CREDITOR AGREES IN
    20     WRITING TO SUSPEND PENDING ACTIONS AND TO FORBEAR FROM
    21     BRINGING AN ALTERNATE OR ADDITIONAL LEGAL ACTION AGAINST THE
    22     MUNICIPALITY TO COLLECT THE DEBT OR PART OF IT FOR A PERIOD
    23     OF NINE MONTHS OR UNTIL THE MUNICIPALITY ADOPTS A PLAN UNDER
    24     THIS ACT, WHICHEVER OCCURS FIRST. THE FILING OF A FEDERAL
    25     DEBT ADJUSTMENT ACTION BY A MUNICIPALITY PURSUANT TO
    26     SUBCHAPTER D OF CHAPTER 2 DURING THE NINE-MONTH PERIOD
    27     CANCELS THE FORBEARANCE OBLIGATION.
    28         (4)  TEN PERCENT OF THE NUMBER OF ELECTORS OF THE
    29     MUNICIPALITY THAT VOTED AT THE LAST MUNICIPAL ELECTION, BY
    30     PETITION TO THE DEPARTMENT ALLEGING THE MUNICIPALITY IS
    19870S0864B1258                 - 18 -

     1     FISCALLY DISTRESSED.
     2         (5)  TRUSTEE OF A MUNICIPAL PENSION FUND; AN ACTUARY FOR
     3     A PENSION FUND; OR 10% OR MORE OF THE BENEFICIARIES OF A
     4     PENSION FUND UPON PETITION TO THE DEPARTMENT, PROVIDED THAT A
     5     MUNICIPALITY HAS NOT TIMELY DEPOSITED ITS MINIMUM OBLIGATION
     6     PAYMENT AS REQUIRED BY SECTION 302 OF THE ACT OF DECEMBER 18,
     7     1984 (P.L.1005, NO.205), KNOWN AS THE MUNICIPAL PENSION PLAN
     8     FUNDING STANDARD AND RECOVERY ACT.
     9         (6)  TEN PERCENT OF THE EMPLOYEES OF THE MUNICIPALITY WHO
    10     HAVE NOT BEEN PAID FOR OVER 30 DAYS FROM THE TIME OF A MISSED
    11     PAYROLL, UPON SIGNING COLLECTIVELY THE PETITION TO THE
    12     DEPARTMENT.
    13         (7)  TRUSTEES OR PAYING AGENTS OF A MUNICIPAL BOND
    14     INDENTURE.
    15         (8)  THE ELECTED AUDITORS, APPOINTED INDEPENDENT AUDITORS
    16     OR ELECTED CONTROLLERS OF A MUNICIPALITY IF THEY HAVE REASON
    17     TO BELIEVE A MUNICIPALITY IS IN A STATE OF FINANCIAL DISTRESS
    18     PURSUANT TO SECTION 201.
    19  SECTION 203.  PROCEDURE FOR DETERMINATION.
    20     (A)  PETITION.--A PARTY WITH STANDING TO PETITION UNDER
    21  SECTION 202 MAY PETITION THE SECRETARY SEEKING A DETERMINATION
    22  THAT THE MUNICIPALITY INVOLVED IS A FINANCIALLY DISTRESSED
    23  MUNICIPALITY. THE PETITION SHALL BE SIGNED BY A PARTY WITH
    24  STANDING, AND IT SHALL BE SEALED AND DULY NOTARIZED. THE
    25  PETITION SHALL:
    26         (1)  ALLEGE THE PETITIONER HAS STANDING TO BRING A
    27     DETERMINATION OF THE DISTRESS.
    28         (2)  STATE WHY THE PETITIONER BELIEVES THE MUNICIPALITY
    29     IS DISTRESSED UNDER SECTION 201.
    30         (3)  INCLUDE A LISTING OF JUDGMENTS RECORDED AGAINST THE
    19870S0864B1258                 - 19 -

     1     MUNICIPALITY.
     2         (4)  INCLUDE ANY OTHER MATERIAL ALLEGATION JUSTIFYING THE
     3     RELIEF AFFORDED BY THIS ACT.
     4         (5)  IF THE PETITIONER IS A MUNICIPALITY, THE PETITION
     5     MAY STATE WHY THE PETITIONER BELIEVES MANIFESTATION OF
     6     SECTION 201 CRITERIA IS IMMINENT AND INEVITABLE. THIS
     7     STATEMENT MAY BE IN LIEU OF THE STATEMENT REQUIRED UNDER
     8     PARAGRAPH (2).
     9     (B)  HEARING.--WITHIN TEN DAYS OF RECEIVING A PETITION, THE
    10  SECRETARY SHALL SET A TIME AND PLACE FOR A PUBLIC HEARING WHICH
    11  SHALL BE SCHEDULED TO BE HELD ON A DATE AT LEAST TWO WEEKS BUT
    12  NOT MORE THAN 30 DAYS LATER WITHIN THE COUNTY OF THE SUBJECT
    13  MUNICIPALITY.
    14     (C)  INVESTIGATION.--AFTER RECEIVING THE PETITION BUT BEFORE
    15  THE PUBLIC HEARING, THE SECRETARY MAY MAKE AN INVESTIGATION INTO
    16  THE FINANCIAL AFFAIRS OF THE MUNICIPALITY. THE RESULTS OF THE
    17  INVESTIGATION OR ANY STUDY PREVIOUSLY CONDUCTED BY THE
    18  DEPARTMENT UNDER SECTION 121 SHALL BE PLACED IN THE RECORD OF
    19  THE PUBLIC HEARING.
    20     (D)  NOTICE.--THE SECRETARY SHALL PUBLISH NOTICE OF THE
    21  HEARING IN ACCORDANCE WITH THE ACT OF JULY 3, 1986 (P.L.388,
    22  NO.84), KNOWN AS THE SUNSHINE ACT, AT LEAST ONCE IN A NEWSPAPER
    23  WITH GENERAL CIRCULATION IN THE SUBJECT MUNICIPALITY AND SHALL
    24  GIVE WRITTEN NOTICE BY CERTIFIED MAIL, WITH RETURN RECEIPT
    25  REQUESTED, UPON THE MUNICIPAL CLERK OR MUNICIPAL SECRETARY, THE
    26  MAYOR, THE MUNICIPAL SOLICITOR, EACH MEMBER OF THE GOVERNING
    27  BODY OF THE MUNICIPALITY AND THE PETITIONER.
    28     (E)  HEARING OFFICER.--THE SECRETARY OR AN OFFICIAL OF THE
    29  DEPARTMENT DESIGNATED BY THE SECRETARY SHALL CONDUCT THE PUBLIC
    30  HEARING TO HEAR TESTIMONY OF THE PETITIONERS AND OTHER
    19870S0864B1258                 - 20 -

     1  INTERESTED PERSONS.
     2     (F)  DETERMINATION.--WITHIN 30 DAYS AFTER THE HEARING, THE
     3  SECRETARY SHALL ISSUE AN ADMINISTRATIVE DETERMINATION OF WHETHER
     4  THE MUNICIPALITY IS FINANCIALLY DISTRESSED AND REASONS FOR THE
     5  DETERMINATION.
     6     (G)  APPEAL.--A DETERMINATION BY THE SECRETARY UNDER THIS ACT
     7  IS APPEALABLE PURSUANT TO TITLE 2 OF THE PENNSYLVANIA
     8  CONSOLIDATED STATUTES (RELATING TO ADMINISTRATIVE LAW AND
     9  PROCEDURE).
    10  SECTION 204.  COMMONWEALTH FUNDS.
    11     NO MUNICIPALITY SHALL BE DEEMED TO BE DISTRESSED BY REASON OF
    12  CIRCUMSTANCES ARISING AS A RESULT OF THE FAILURE OF THE
    13  COMMONWEALTH TO MAKE ANY PAYMENT OF MONEY, INCLUDING ANY FEDERAL
    14  MONEY WHICH PASSES THROUGH THE COMMONWEALTH, DUE THE
    15  MUNICIPALITY AT THE TIME SUCH PAYMENT IS DUE.
    16                            SUBCHAPTER B
    17                            COORDINATOR
    18  SECTION 221.  DESIGNATION.
    19     (A)  APPOINTMENT.--NO LATER THAN 30 DAYS FOLLOWING A
    20  DETERMINATION OF MUNICIPAL FINANCIAL DISTRESS UNDER SECTION 203,
    21  THE SECRETARY SHALL APPOINT A COORDINATOR WHO SHALL PREPARE A
    22  PLAN ADDRESSING THE MUNICIPALITY'S FINANCIAL PROBLEMS.
    23     (B)  QUALIFICATIONS.--THE COORDINATOR MAY BE AN EMPLOYEE OF
    24  THE DEPARTMENT, FURNISHED WITH ADDITIONAL STAFF OR CONSULTANT
    25  ASSISTANCE, IF NEEDED, OR MAY BE A CONSULTANT OR CONSULTING
    26  FIRM. NO ELECTED OR APPOINTED OFFICIAL OR EMPLOYEE OF THE
    27  MUNICIPALITY SHALL BE ELIGIBLE FOR SERVING AS COORDINATOR. THE
    28  COORDINATOR SHALL BE EXPERIENCED IN MUNICIPAL ADMINISTRATION AND
    29  FINANCE.
    30     (C)  COMPENSATION.--THE DEPARTMENT SHALL BE RESPONSIBLE FOR
    19870S0864B1258                 - 21 -

     1  COMPENSATING THE COORDINATOR APPOINTED BY THE SECRETARY FOR
     2  REASONABLE SALARY AND EXPENSES. NOTWITHSTANDING ANY LAW TO THE
     3  CONTRARY, THE APPOINTMENT OF A PLAN COORDINATOR SHALL NOT BE
     4  SUBJECT TO CONTRACTUAL COMPETITIVE BIDDING PROCEDURES.
     5     (D)  DUTIES.--THE COORDINATOR SHALL PREPARE AND ADMINISTER A
     6  PLAN DESIGNED TO RELIEVE THE FINANCIAL DISTRESS OF THE
     7  MUNICIPALITY WHICH HE HAS BEEN APPOINTED TO SERVE.
     8     (E)  POWERS.--THE COORDINATOR MAY APPLY FOR GRANTS AND LOANS
     9  PURSUANT TO CHAPTER 3, AS HE DEEMS NECESSARY.
    10  SECTION 222.  ACCESS TO INFORMATION.
    11     THE COORDINATOR SHALL HAVE FULL ACCESS TO ALL MUNICIPAL
    12  RECORDS. IF THE COORDINATOR BELIEVES THAT AN OFFICIAL OR
    13  EMPLOYEE OF THE MUNICIPALITY IS NOT ANSWERING QUESTIONS
    14  ACCURATELY OR COMPLETELY OR IS NOT FURNISHING INFORMATION
    15  REQUESTED, THE COORDINATOR MAY NOTIFY THE OFFICIAL OR EMPLOYEE,
    16  IN WRITING, TO FURNISH ANSWERS TO QUESTIONS OR TO FURNISH
    17  DOCUMENTS OR RECORDS, OR BOTH. IF THE OFFICIAL OR EMPLOYEE
    18  REFUSES, THE COORDINATOR MAY SEEK A SUBPOENA IN THE COURT OF
    19  COMMON PLEAS TO COMPEL TESTIMONY AND FURNISH RECORDS AND
    20  DOCUMENTS. AN ACTION IS MANDAMUS SHALL LIE TO ENFORCE THE
    21  PROVISIONS OF THIS SECTION.
    22  SECTION 223.  PUBLIC AND PRIVATE MEETINGS.
    23     (A)  PUBLIC MEETINGS AUTHORIZED.--THE COORDINATOR MAY HOLD
    24  PUBLIC MEETINGS AS DEFINED IN THE ACT OF JULY 3, 1986 (P.L.388,
    25  NO.84), KNOWN AS THE SUNSHINE ACT, IN CONNECTION WITH PLAN
    26  PREPARATION.
    27     (B)  PRIVATE MEETINGS AUTHORIZED.--NOTWITHSTANDING THE
    28  PROVISIONS OF THE SUNSHINE ACT, PRIVATE NEGOTIATION SESSIONS MAY
    29  BE CONDUCTED BY THE COORDINATOR BETWEEN THE MUNICIPALITY AND THE
    30  INDIVIDUAL CREDITORS IN AN EFFORT TO OBTAIN THE CONSENT OF EACH
    19870S0864B1258                 - 22 -

     1  CREDITOR TO THE PROPOSED ADJUSTMENT AND HANDLING OF SPECIFIC
     2  CLAIMS AGAINST THE MUNICIPALITY.
     3  SECTION 224.  COORDINATOR BARRED FROM ELECTIVE OFFICE.
     4     THE COORDINATOR MAY NOT RUN FOR AN ELECTED OFFICE OF THE
     5  MUNICIPALITY OR ITS COTERMINOUS POLITICAL SUBDIVISIONS WITHIN
     6  TWO YEARS AFTER THE FINAL ADOPTION OF A PLAN PURSUANT TO THIS
     7  ACT.
     8                            SUBCHAPTER C
     9                         COORDINATOR'S PLAN
    10  SECTION 241.  CONTENTS.
    11     A PLAN FORMULATED BY THE APPOINTED COORDINATOR SHALL BE
    12  CONSISTENT WITH APPLICABLE LAW AND SHALL INCLUDE ANY OF THE
    13  FOLLOWING FACTORS WHICH ARE RELEVANT TO ALLEVIATING THE
    14  FINANCIALLY DISTRESSED STATUS OF THE MUNICIPALITY:
    15         (1)  PROJECTIONS OF REVENUES AND EXPENDITURES FOR THE
    16     CURRENT YEAR AND THE NEXT TWO YEARS, BOTH ASSUMING THE
    17     CONTINUATION OF PRESENT OPERATIONS AND AS IMPACTED BY THE
    18     MEASURES IN THE PLAN.
    19         (2)  RECOMMENDATIONS WHICH WILL:
    20             (I)  SATISFY JUDGMENTS, PAST DUE ACCOUNTS PAYABLE,
    21         AND PAST DUE AND PAYABLE PAYROLL AND FRINGE BENEFITS.
    22             (II)  ELIMINATE DEFICITS AND DEFICIT FUNDS.
    23             (III)  RESTORE TO SPECIAL FUND ACCOUNTS MONEY FROM
    24         THOSE ACCOUNTS THAT WAS USED FOR PURPOSES OTHER THAN
    25         THOSE SPECIFICALLY AUTHORIZED.
    26             (IV)  BALANCE THE BUDGET, AVOID FUTURE DEFICITS IN
    27         FUNDS AND MAINTAIN CURRENT PAYMENTS OF PAYROLL, FRINGE
    28         BENEFITS AND ACCOUNTS THROUGH POSSIBLE REVENUE
    29         ENHANCEMENT RECOMMENDATIONS, INCLUDING TAX OR FEE
    30         CHANGES.
    19870S0864B1258                 - 23 -

     1             (V)  AVOID A FISCAL EMERGENCY CONDITION IN THE
     2         FUTURE.
     3             (VI)  ENHANCE THE ABILITY OF THE MUNICIPALITY TO
     4         NEGOTIATE NEW GENERAL OBLIGATION BONDS, LEASE RENTAL
     5         DEBT, FUNDED DEBT AND TAX AND REVENUE ANTICIPATION
     6         BORROWING.
     7             (VII)  CONSIDER CHANGES IN ACCOUNTING AND AUTOMATION
     8         PROCEDURES FOR THE FINANCIAL BENEFIT OF THE MUNICIPALITY.
     9             (VIII)  PROPOSE A REDUCTION OF DEBT DUE ON SPECIFIC
    10         CLAIMS BY AN AMORTIZED OR LUMP SUM PAYMENT CONSIDERED TO
    11         BE THE MOST REASONABLE DISPOSITION OF EACH CLAIM POSSIBLE
    12         FOR THE MUNICIPALITY CONSIDERING THE TOTALITY OF
    13         CIRCUMSTANCES.
    14         (3)  POSSIBLE CHANGES IN COLLECTIVE BARGAINING AGREEMENTS
    15     AND PERMANENT AND TEMPORARY STAFFING LEVEL CHANGES OR CHANGES
    16     IN ORGANIZATION.
    17         (4)  RECOMMENDED CHANGES IN MUNICIPAL ORDINANCES OR
    18     RULES.
    19         (5)  RECOMMENDATIONS FOR SPECIAL AUDITS OR FURTHER
    20     STUDIES.
    21         (6)  AN ANALYSIS OF WHETHER CONDITIONS SET FORTH IN
    22     SECTION 261 EXIST, WHETHER SPECIFIC EXCLUSIVE FEDERAL
    23     REMEDIES COULD HELP RELIEVE THE MUNICIPALITY'S FINANCIAL
    24     DISTRESS AND WHETHER FILING A FEDERAL DEBT ADJUSTMENT ACTION
    25     UNDER SUBCHAPTER D IS DEEMED TO BE APPROPRIATE.
    26         (7)  AN ANALYSIS OF WHETHER THE ECONOMIC CONDITIONS OF
    27     THE MUNICIPALITY ARE SO SEVERE THAT IT IS REASONABLE TO
    28     CONCLUDE THAT THE MUNICIPALITY IS NO LONGER VIABLE AND SHOULD
    29     CONSOLIDATE OR MERGE WITH AN ADJACENT MUNICIPALITY OR
    30     MUNICIPALITIES PURSUANT TO CHAPTER 4.
    19870S0864B1258                 - 24 -

     1  SECTION 242.  PUBLICATION.
     2     (A)  FILING.--WITHIN 90 DAYS OF BEING NAMED, THE COORDINATOR
     3  SHALL FORMULATE A PLAN FOR RELIEVING THE MUNICIPALITY'S
     4  FINANCIAL DISTRESS AND SHALL DELIVER TRUE AND CORRECT COPIES OF
     5  IT TO:
     6         (1)  THE MUNICIPAL CLERK OR MUNICIPAL SECRETARY, WHO
     7     SHALL IMMEDIATELY PLACE THE COPY ON FILE FOR PUBLIC
     8     INSPECTION 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
    15     SECTION 203.
    16     (B)  DATE OF FILING.--FOR PURPOSES OF THIS SECTION, THE DATE
    17  OF FILING THE PLAN SHALL BE THE DATE ON WHICH THE MUNICIPAL
    18  CLERK OR MUNICIPAL SECRETARY PLACES A TRUE AND CORRECT COPY OF
    19  THE PLAN ON FILE FOR PUBLIC INSPECTION IN THE MUNICIPAL OFFICE.
    20     (C)  NOTICES OF PLAN.--
    21         (1)  ON THE DATE OF FILING, NOTICE THAT A PLAN HAS BEEN
    22     FILED AND IS OPEN FOR PUBLIC INSPECTION IN THE MUNICIPAL
    23     OFFICE SHALL BE PUBLISHED BY THE COORDINATOR IN THE COUNTY
    24     LEGAL REPORTER AND IN ONE OR MORE NEWSPAPERS WITH GENERAL
    25     CIRCULATION SERVING THE AREA IN WHICH THE MUNICIPALITY IS
    26     LOCATED. THE COST FOR PUBLISHING THE NOTICE SHALL BE BORNE BY
    27     THE DEPARTMENT. THE NOTICE SHALL SET FORTH THE FOLLOWING
    28     INFORMATION:
    29             (I)  THAT A PLAN REGARDING THE COORDINATION AND
    30         RELIEF OF THE MUNICIPALITY'S FINANCIAL DISTRESS WAS FILED
    19870S0864B1258                 - 25 -

     1         PURSUANT TO THIS ACT.
     2             (II)  THE DATE AND PLACE OF FILING.
     3             (III)  THAT THE PUBLIC HAS 15 DAYS FROM THE DATE OF
     4         FILING IN WHICH TO FILE WRITTEN COMMENTS ON THE PLAN.
     5             (IV)  THE NAME AND ADDRESS OF THE COORDINATOR TO WHOM
     6         WRITTEN COMMENTS SHOULD BE SENT.
     7             (V)  SUMMARY OF THE PLAN.
     8         (2)  NOTICE OF A COORDINATOR'S PUBLIC MEETING ON THE PLAN
     9     SHALL BE PUBLISHED BY THE COORDINATOR IN THE COUNTY LEGAL
    10     REPORTER AND IN ONE OR MORE NEWSPAPER WITH GENERAL
    11     CIRCULATION SERVING THE AREA IN WHICH THE MUNICIPALITY IS
    12     LOCATED. THE DEPARTMENT SHALL BEAR THE COST FOR PUBLISHING
    13     THE NOTICE. THE NOTICE SHALL CONTAIN THE FOLLOWING
    14     INFORMATION:
    15             (I)  THAT THE PURPOSE OF THE COORDINATOR'S PUBLIC
    16         MEETING IS TO RECEIVE PUBLIC COMMENTS ON THE PLAN.
    17             (II)  THE DATE AND PLACE OF THE MEETING.
    18         (3)  THE COORDINATOR MAY COMBINE THE PUBLICATION OF THE
    19     NOTICE THAT A PLAN HAS BEEN FILED WITH THE PUBLICATION OF THE
    20     NOTICE OF THE PUBLIC MEETING.
    21     (D)  COMMENT PERIOD.--WRITTEN COMMENTS ON THE PLAN MAY BE
    22  FILED WITH THE COORDINATOR. WRITTEN COMMENTS SHALL BE MADE NO
    23  LATER THAN 15 DAYS AFTER THE DATE OF FILING. WRITTEN COMMENTS
    24  JUDGED BY THE COORDINATOR TO HAVE VALUE TO THE PLAN MAY BE USED
    25  TO DEVELOP A REVISED PLAN.
    26     (E)  COORDINATOR'S PUBLIC MEETING.--A MEETING CONDUCTED BY
    27  THE COORDINATOR IN THE MUNICIPALITY SHALL BE SET FOR A DATE NOT
    28  LATER THAN 20 DAYS AFTER THE DATE OF FILING THE PLAN. THE
    29  COORDINATOR SHALL REQUEST IN WRITING THAT THE CHIEF EXECUTIVE
    30  OFFICER, EACH MEMBER OF THE MUNICIPAL GOVERNING BODY AND THE
    19870S0864B1258                 - 26 -

     1  CHIEF FINANCIAL OFFICER OF THE MUNICIPALITY TO BE PRESENT AT THE
     2  COORDINATOR'S MEETING. COMMENTS ON THE PLAN SHALL BE RECEIVED BY
     3  THE COORDINATOR AT THAT TIME.
     4  SECTION 243.  REVIEW OF PLAN.
     5     (A)  GENERAL RULE.--THE COORDINATOR, IN HIS DISCRETION, SHALL
     6  CONSIDER COMMENTS MADE ON THE PLAN. CREDITORS WHO DO NOT CONSENT
     7  TO THE HANDLING OF THEIR CLAIM BY THE PLAN, SHALL NOTIFY THE
     8  COORDINATOR OF THEIR REJECTION OF THE PLAN NOT LATER THAN TEN
     9  DAYS BEFORE THE PUBLIC MEETING SCHEDULED BY THE GOVERNING BODY
    10  UNDER SECTION 245.
    11     (B)  REJECTED CLAIMS.--IF A CREDITOR HAS REJECTED THE PLAN,
    12  THE COORDINATOR SHALL MAKE A WRITTEN REPORT TO THE GOVERNING
    13  BODY STATING WHETHER THE TIMING AND AMOUNT OF PAYMENT OR
    14  PROPOSED RESOLUTION OF THE CLAIM IS THE BEST DISPOSITION THE
    15  MUNICIPALITY CAN MAKE.
    16     (C)  ADDITIONAL NEGOTIATIONS AUTHORIZED.--ADDITIONAL
    17  NEGOTIATIONS BETWEEN THE MUNICIPALITY AND CREDITORS REJECTING
    18  THE PLAN SHALL BE ENCOURAGED AND PRESIDED OVER BY THE
    19  COORDINATOR.
    20     (D)  GOVERNING BODY PROPOSALS.--THE GOVERNING BODY OF THE
    21  MUNICIPALITY MAY PROPOSE TO THE COORDINATOR RESOLUTIONS OF
    22  CLAIMS WHICH HAVE BEEN THE REASON FOR REJECTION OF THE PROPOSED
    23  PLAN, AND THE COORDINATOR MAY REVISE THE PLAN ACCORDINGLY.
    24     (E)  REVISION ON OWN INITIATIVE.--NOTHING IN THIS SECTION
    25  SHALL PRECLUDE THE COORDINATOR FROM REVISING A PLAN OF HIS OWN
    26  INITIATIVE.
    27  SECTION 244.  REVISION.
    28     NEITHER THE SECRETARY NOR THE CHIEF EXECUTIVE OFFICER OR THE
    29  GOVERNING BODY, AS APPROPRIATE, MAY REVISE THE COORDINATOR'S
    30  PLAN. HOWEVER, THE COORDINATOR SHALL CONSULT WITH THE SECRETARY
    19870S0864B1258                 - 27 -

     1  AND EITHER THE CHIEF EXECUTIVE OFFICER OR THE GOVERNING BODY
     2  THROUGHOUT THE REVISION OF THE PLAN AND SHALL GIVE CONSIDERATION
     3  TO COMMENTS THEY MAY PROPOSE.
     4  SECTION 245.  ADOPTION BY MUNICIPALITY.
     5     NOT LATER THAN 15 DAYS FOLLOWING THE COORDINATOR'S PUBLIC
     6  MEETING, THE MUNICIPAL GOVERNING BODY SHALL EITHER ENACT AN
     7  ORDINANCE APPROVING THE IMPLEMENTATION OF THE PLAN, INCLUDING
     8  ENACTMENT OF NECESSARY RELATED ORDINANCES AND REVISIONS TO
     9  ORDINANCES, OR SHALL REJECT THE PLAN AND PROCEED UNDER SECTION
    10  246. IF THE ORDINANCE TAKES EFFECT IN A MUNICIPALITY OPERATING
    11  UNDER AN OPTIONAL PLAN FORM OF GOVERNMENT OR A HOME RULE
    12  CHARTER, THE CHIEF EXECUTIVE OFFICER MAY ISSUE AN ORDER
    13  DIRECTING THE IMPLEMENTATION OF THE PLAN NO LATER THAN SEVEN
    14  DAYS FROM THE ENACTMENT OF THE ORDINANCE BY THE GOVERNING BODY.
    15  SECTION 246.  PREPARATION AND ACTION ON ALTERNATE PLAN.
    16     (A)  CHIEF EXECUTIVE OFFICER'S PLAN.--IF THE GOVERNING BODY
    17  OF A MUNICIPALITY THAT OPERATES UNDER AN OPTIONAL PLAN FORM OF
    18  GOVERNMENT OR A HOME RULE CHARTER ENACTS AN ORDINANCE DIRECTING
    19  IMPLEMENTATION OF THE COORDINATOR'S PLAN AND THE CHIEF EXECUTIVE
    20  OFFICER REFUSES OR FAILS TO ISSUE AN ORDER AS PROVIDED IN
    21  SECTION 245, OR IF THE GOVERNING BODY REFUSES TO ENACT AN
    22  ORDINANCE APPROVING THE COORDINATOR'S PLAN, THEN THE CHIEF
    23  EXECUTIVE OFFICER, WITHIN 14 DAYS OF THE ACTION OR REFUSAL TO
    24  ACT ON THE ORDINANCE BY THE GOVERNING BODY, SHALL DEVELOP A
    25  PLAN, INCLUDING A SIGNED ORDER IMPLEMENTING IT, WHICH SHALL BE
    26  THE SUBJECT OF A PUBLIC MEETING NO LATER THAN TEN DAYS FOLLOWING
    27  ITS COMPLETION.
    28         (1)  THE CHIEF EXECUTIVE OFFICER MAY CONDUCT PRIVATE
    29     SESSIONS BEFORE THE PUBLIC MEETING WITH INDIVIDUAL CREDITORS
    30     IN AN EFFORT TO OBTAIN THE CONSENT OF EACH CREDITOR TO
    19870S0864B1258                 - 28 -

     1     PROPOSED ADJUSTMENT AND HANDLING OF SPECIFIC CLAIMS AGAINST
     2     THE MUNICIPALITY. AN AGREEMENT REACHED AS A RESULT OF THESE
     3     PRIVATE SESSIONS SHALL BECOME A MATTER OF RECORD AND PART OF
     4     THE PROCEEDINGS OF THE PUBLIC MEETING CONDUCTED PURSUANT TO
     5     THIS SUBSECTION.
     6         (2)  THE CHIEF EXECUTIVE OFFICER SHALL BE RESPONSIBLE FOR
     7     PLACING NOTICE THAT A PUBLIC MEETING WILL BE HELD ON HIS
     8     PLAN. NOTICE SHALL BE PUBLISHED IN THE SAME MANNER AS
     9     PROVIDED IN SECTION 242(C). THE COORDINATOR SHALL ATTEND THE
    10     PUBLIC MEETING AND FURNISH WRITTEN AND ORAL COMMENTS ON THE
    11     CHIEF EXECUTIVE OFFICER'S PLAN.
    12     (B)  GOVERNING BODY'S PLAN.--IN THE CASE OF A MUNICIPALITY
    13  OPERATING UNDER A FORM OF GOVERNMENT OTHER THAN AN OPTIONAL PLAN
    14  FORM OF GOVERNMENT OR A HOME RULE CHARTER, IF THE GOVERNING BODY
    15  BY MAJORITY VOTE REFUSES TO ENACT AN ORDINANCE APPROVING AND
    16  IMPLEMENTING THE COORDINATOR'S PLAN AS PROVIDED IN SECTION 245,
    17  THEN WITHIN 14 DAYS OF ITS REFUSAL THE GOVERNING BODY SHALL
    18  DEVELOP A PLAN WHICH SHALL BE THE SUBJECT OF A PUBLIC MEETING
    19  HELD NOT LATER THAN TEN DAYS FOLLOWING PLAN COMPLETION.
    20         (1)  THE GOVERNING BODY MAY CONDUCT PRIVATE SESSIONS
    21     BEFORE THE PUBLIC MEETING WITH INDIVIDUAL CREDITORS IN AN
    22     EFFORT TO OBTAIN CONSENT OF EACH CREDITOR TO PROPOSED
    23     ADJUSTMENT AND HANDLING OF SPECIFIC CLAIMS AGAINST THE
    24     MUNICIPALITY. AN AGREEMENT REACHED AS A RESULT OF THESE
    25     PRIVATE SESSIONS SHALL BECOME A MATTER OF RECORD AND PART OF
    26     THE PROCEEDINGS OF THE PUBLIC MEETING CONDUCTED PURSUANT TO
    27     THIS SUBSECTION.
    28         (2)  THE GOVERNING BODY SHALL BE RESPONSIBLE FOR PLACING
    29     NOTICE THAT A PUBLIC MEETING WILL BE HELD ON ITS PLAN. NOTICE
    30     SHALL BE PUBLISHED IN THE SAME MANNER AS PROVIDED IN SECTION
    19870S0864B1258                 - 29 -

     1     242(C). THE COORDINATOR SHALL ATTEND THE PUBLIC MEETING AND
     2     FURNISH WRITTEN AND ORAL COMMENTS ON THE GOVERNING BODY'S
     3     PLAN.
     4     (C)  APPROVAL OR REJECTION OF PLAN.--FOLLOWING THE PUBLIC
     5  MEETING ON THE CHIEF EXECUTIVE OFFICER'S PLAN OR THE GOVERNING
     6  BODY'S PLAN, THE GOVERNING BODY MAY ENACT AN ORDINANCE,
     7  INCLUDING NECESSARY RELATED IMPLEMENTING ORDINANCES OR REVISIONS
     8  TO ORDINANCES, APPROVING THE PLAN.
     9     (D)  REVIEW BY SECRETARY.--
    10         (1)  IF AN ORDINANCE IS ENACTED APPROVING A PLAN UNDER
    11     THIS SECTION, IT SHALL BE FORWARDED TO THE SECRETARY FOR
    12     DETERMINATION THAT THE PLAN, WHEN IMPLEMENTED, WILL OVERCOME
    13     THE MUNICIPALITY'S FINANCIAL DISTRESS.
    14         (2)  IF THE SECRETARY IS OF THE OPINION THAT THE PLAN,
    15     WHEN IMPLEMENTED, WILL OVERCOME THE MUNICIPALITY'S FINANCIAL
    16     DISTRESS, THE SECRETARY SHALL SO INFORM THE MUNICIPALITY.
    17         (3)  IF THE SECRETARY IS OF THE OPINION THAT THE PLAN,
    18     WHEN IMPLEMENTED, WILL NOT OVERCOME THE MUNICIPALITY'S
    19     FINANCIAL PROBLEMS, THE SECRETARY SHALL INFORM THE
    20     MUNICIPALITY OF THE FOLLOWING:
    21             (I)  THE SECRETARY'S DETERMINATION.
    22             (II)  THE REASONS FOR THE DETERMINATION.
    23             (III)  THE APPLICABILITY OF SECTIONS 251 AND 264 TO
    24         THE MUNICIPALITY.
    25  SECTION 247.  PLAN IMPLEMENTATION.
    26     (A)  COORDINATOR'S PLAN.--IF THE COORDINATOR'S PLAN IS
    27  ADOPTED BY THE MUNICIPAL GOVERNING BODY, THE COORDINATOR SHALL
    28  BE CHARGED WITH IMPLEMENTING HIS PLAN AND SHALL:
    29         (1)  GIVE WRITTEN NOTICE OF PLAN ADOPTION TO CREDITORS,
    30     COLLECTIVE BARGAINING UNITS AND OTHER PARTIES WHO WILL BE
    19870S0864B1258                 - 30 -

     1     DIRECTLY AFFECTED BY PLAN IMPLEMENTATION. IN THE NOTICE HE
     2     SHALL OUTLINE THE PROVISIONS OF THE PLAN AND SPECIFY HOW THAT
     3     PERSON'S CLAIM OR INTEREST WILL BE TREATED.
     4         (2)  INITIATE PLAN IMPLEMENTATION AND CONTINUE ITS
     5     IMPLEMENTATION FOR AT LEAST FOUR MONTHS.
     6         (3)  OVERSEE COMPLETION OF THE PLAN EITHER BY DIRECTLY
     7     CONTROLLING THE IMPLEMENTATION PROCESS OR BY TURNING THE
     8     IMPLEMENTATION PROCESS OVER TO A PERSON DESIGNATED BY THE
     9     GOVERNING BODY OR BY THE CHIEF EXECUTIVE OFFICER, AS THE CASE
    10     MAY BE. THE PERSON DESIGNATED SHALL SUPPLY THE COORDINATOR
    11     WITH MONTHLY REPORTS.
    12         (4)  TERMINATE THE PLAN UPON ITS COMPLETION.
    13         (5)  SUGGEST AMENDMENTS TO THE PLAN WHICH MAY BE
    14     NECESSARY TO IMPLEMENT OR COMPLETE THE PLAN.
    15     (B)  CHIEF EXECUTIVE OFFICER'S PLAN.--IF THE PLAN ADOPTED IS
    16  THE PLAN PROPOSED BY THE CHIEF EXECUTIVE OFFICER IN AN OPTIONAL
    17  PLAN FORM OF GOVERNMENT OR HOME RULE CHARTER, THE CHIEF
    18  EXECUTIVE OFFICER SHALL HAVE THE DUTIES OF THE COORDINATOR SET
    19  FORTH IN SUBSECTION (A).
    20     (C)  MUNICIPAL GOVERNING BODY'S PLAN.--IF THE PLAN ADOPTED IS
    21  THE PLAN PROPOSED BY THE MUNICIPAL GOVERNING BODY, A PERSON
    22  DESIGNATED BY THE GOVERNING BODY SHALL HAVE THE DUTIES OF THE
    23  COORDINATOR SET FORTH IN SUBSECTION (A).
    24  SECTION 248.  FAILURE TO ADOPT OR IMPLEMENT PLAN.
    25     IF NO PLAN IS ADOPTED OR IMPLEMENTED PURSUANT TO THIS
    26  CHAPTER, THEN SECTIONS 251 AND 264 SHALL APPLY.
    27  SECTION 249.  PLAN AMENDMENTS.
    28     AN AMENDMENT TO AN ADOPTED PLAN MAY BE INITIATED BY THE
    29  COORDINATOR, THE CHIEF EXECUTIVE OFFICER, OR THE GOVERNING BODY
    30  OF A MUNICIPALITY, AS THE CASE MAY BE. THE ADOPTION OF AN
    19870S0864B1258                 - 31 -

     1  AMENDMENT SHALL BE BY ORDINANCE.
     2  SECTION 250.  DEBT PROVISIONS.
     3     ADOPTION OF A PLAN BY ORDINANCE IS A CONDITION PRECEDENT FOR
     4  THE APPROVAL OF LONG-TERM DEBT OR FUNDING DEBT UNDER THE ACT OF
     5  JULY 12, 1972 (P.L.781, NO.185), KNOWN AS THE LOCAL GOVERNMENT
     6  UNIT DEBT ACT. A DEBT FINANCING PROVISION OF THE PLAN MAY BE
     7  WAIVED BY AGREEMENT OF THE LENDER AND THE MUNICIPALITY; BUT ANY
     8  SUCH WAIVING MUST BE EXPRESSLY SET FORTH IN THE INDENTURE OR
     9  CONTRACT SECURING THE DEBT.
    10  SECTION 251.  COMMONWEALTH AGENCY PAYMENTS OR ASSISTANCE.
    11     (A)  WITHHOLDING OF CERTAIN COMMONWEALTH FUNDS.--EXCEPT AS
    12  PROVIDED IN SECTION 302(B), UPON CERTIFICATION BY THE SECRETARY
    13  THAT A FINANCIALLY DISTRESSED MUNICIPALITY HAS FAILED TO ADOPT A
    14  PLAN OR IMPLEMENT AN ADOPTED PLAN AS PROPOSED UNDER THIS ACT OR
    15  HAS ADOPTED A PLAN WHICH IS INADEQUATE TO ADDRESS THE
    16  MUNICIPALITY'S FINANCIAL DISTRESS, THE MUNICIPALITY SHALL NOT
    17  RECEIVE A GRANT, LOAN, ENTITLEMENT OR PAYMENT FROM THE
    18  COMMONWEALTH OR ANY OF ITS AGENCIES. MONEYS WITHHELD SHALL BE
    19  HELD IN ESCROW BY THE COMMONWEALTH UNTIL THE SECRETARY HAS
    20  RESCINDED THE CERTIFICATION.
    21     (B)  EXCEPTIONS TO THE WITHHOLDING OF COMMONWEALTH FUNDS.--
    22  NOTWITHSTANDING THE PROVISIONS OF SUBSECTION (A), THE FOLLOWING
    23  FUNDS SHALL NOT BE WITHHELD FROM A MUNICIPALITY.
    24         (1)  CAPITAL PROJECTS UNDER CONTRACT IN PROGRESS.
    25         (2)  MONEYS RECEIVED BY A MUNICIPALITY FROM AN AGENCY OF
    26     THE COMMONWEALTH OR THE FEDERAL GOVERNMENT SUBSEQUENT TO THE
    27     DECLARATION OF A DISASTER RESULTING FROM A CATASTROPHE.
    28         (3)  PENSION FUND DISBURSEMENTS MADE PURSUANT TO STATE
    29     LAW.
    30  SECTION 252.  PLAN NOT AFFECTED BY CERTAIN COLLECTIVE BARGAINING
    19870S0864B1258                 - 32 -

     1                 AGREEMENTS OR SETTLEMENTS.
     2     A COLLECTIVE BARGAINING AGREEMENT OR ARBITRATION SETTLEMENT
     3  EXECUTED AFTER THE ADOPTION OF A PLAN SHALL NOT IN ANY MANNER
     4  VIOLATE, EXPAND OR DIMINISH ITS PROVISIONS.
     5  SECTION 253.  TERMINATION OF STATUS.
     6     (A)  DETERMINATION BY SECRETARY.--FOLLOWING A DULY ADVERTISED
     7  PUBLIC HEARING WITH NOTICES GIVEN AS PROVIDED IN SECTION 203,
     8  THE SECRETARY MAY ISSUE A DETERMINATION THAT THE CONDITIONS
     9  WHICH LED TO THE EARLIER DETERMINATION OF MUNICIPAL FINANCIAL
    10  DISTRESS MUNICIPALITY ARE NO LONGER APPLICABLE. THE
    11  DETERMINATION SHALL RESCIND THE STATUS OF MUNICIPAL FINANCIAL
    12  DISTRESS AND SHALL INCLUDE A STATEMENT OF FACTS AS PART OF THE
    13  FINAL ORDER.
    14     (B)  DETERMINATION UPON PETITION BY A MUNICIPALITY.--A
    15  FINANCIALLY DISTRESSED MUNICIPALITY MAY PETITION THE SECRETARY
    16  TO MAKE A DETERMINATION THAT THE CONDITIONS WHICH LED TO THE
    17  EARLIER DETERMINATION OF MUNICIPAL FINANCIAL DISTRESS ARE NO
    18  LONGER PRESENT. UPON RECEIVING THE PETITION, THE SECRETARY MAY
    19  ISSUE A DETERMINATION TO RESCIND FOLLOWING A DULY ADVERTISED
    20  PUBLIC HEARING WITH NOTICES GIVEN AS PROVIDED IN SECTION 203.
    21                            SUBCHAPTER D
    22                     APPLICATION OF FEDERAL LAW
    23  SECTION 261.  FILING MUNICIPAL DEBT ADJUSTMENT UNDER FEDERAL
    24                 LAW.
    25     (A)  AUTHORIZATION.--IN THE EVENT ONE OF THE FOLLOWING
    26  CONDITIONS IS PRESENT, A MUNICIPALITY IS HEREBY AUTHORIZED TO
    27  FILE A MUNICIPAL DEBT ADJUSTMENT ACTION PURSUANT TO THE
    28  BANKRUPTCY CODE (11 U.S.C. § 101 ET SEQ.):
    29         (1)  AFTER RECOMMENDATION BY THE PLAN COORDINATOR
    30     PURSUANT TO SECTION 241(6).
    19870S0864B1258                 - 33 -

     1         (2)  IMMINENT JEOPARDY OF AN ACTION BY A CREDITOR,
     2     CLAIMANT OR SUPPLIER OF GOODS OR SERVICES WHICH IS LIKELY TO
     3     SUBSTANTIALLY INTERRUPT OR RESTRICT THE CONTINUED ABILITY OF
     4     THE MUNICIPALITY TO PROVIDE HEALTH OR SAFETY SERVICES TO ITS
     5     CITIZENS.
     6         (3)  ONE OR MORE CREDITORS OF THE MUNICIPALITY HAVE
     7     REJECTED THE PROPOSED OR ADOPTED PLAN, AND EFFORTS TO
     8     NEGOTIATE RESOLUTION OF THEIR CLAIMS HAVE BEEN UNSUCCESSFUL
     9     FOR A TEN-DAY PERIOD.
    10         (4)  A CONDITION SUBSTANTIALLY AFFECTING THE
    11     MUNICIPALITY'S FINANCIAL DISTRESS IS POTENTIALLY SOLVABLE
    12     ONLY BY UTILIZING A REMEDY EXCLUSIVELY AVAILABLE TO THE
    13     MUNICIPALITY THROUGH THE FEDERAL MUNICIPAL DEBT READJUSTMENT
    14     ACT (48 STAT. 798).
    15         (5)  A MAJORITY OF THE CURRENT OR IMMEDIATELY PRECEDING
    16     GOVERNING BODY OF A MUNICIPALITY DETERMINED TO BE FINANCIALLY
    17     DISTRESSED HAS FAILED TO ADOPT A PLAN OR TO CARRY OUT THE
    18     RECOMMENDATIONS OF THE COORDINATOR PURSUANT TO THIS ACT.
    19     (B)  MAJORITY VOTE.--THIS AUTHORITY MAY BE EXERCISED ONLY
    20  UPON THE VOTE BY A MAJORITY OF THE MUNICIPALITY'S GOVERNING
    21  BODY.
    22  SECTION 262.  SIGNIFICANCE AND DUTY ON FILING FEDERAL ACTION.
    23     (A)  STATUS.--A MUNICIPALITY WHICH FILES A MUNICIPAL DEBT
    24  ADJUSTMENT ACTION UNDER FEDERAL LAW SHALL BE DEEMED TO BE A
    25  FINANCIALLY DISTRESSED MUNICIPALITY UNDER THIS ACT.
    26     (B)  NOTICE.--THE MUNICIPALITY SHALL IMMEDIATELY NOTIFY THE
    27  SECRETARY AND THE PLAN COORDINATOR, IF ONE HAS BEEN ASSIGNED, OF
    28  THE FEDERAL FILING.
    29     (C)  APPOINTMENT OF COORDINATOR.--UPON RECEIPT OF NOTICE OF
    30  FILING OF THE FEDERAL ACTION BY A MUNICIPALITY, THE SECRETARY
    19870S0864B1258                 - 34 -

     1  SHALL APPOINT A PLAN COORDINATOR UNDER SECTION 221, IF NONE HAD
     2  YET BEEN APPOINTED. THE COORDINATOR SHALL FORMULATE A PLAN
     3  APPROVABLE BY THE FEDERAL COURT.
     4  SECTION 263.  APPLICATION OF THIS ACT DURING FEDERAL ACTION.
     5     (A)  EXISTING PLAN.--AFTER FILING A FEDERAL MUNICIPAL DEBT
     6  ADJUSTMENT ACTION, IF THERE IS A PLAN IN PROCESS UNDER THE TERMS
     7  OF THIS ACT, THE MUNICIPALITY SHALL UTILIZE THE PLAN AND THE
     8  EXPERTISE OF THE PLAN COORDINATOR, AMONG OTHERS AVAILABLE TO IT,
     9  TO WORK OUT A REVISED PLAN TO BE PROPOSED THROUGH THE FEDERAL
    10  ACTION, ADAPTING IT TO INCORPORATE FEDERAL REMEDIES WHICH ARE
    11  APPROPRIATE IN THE CIRCUMSTANCES.
    12     (B)  NECESSARY PLAN DEVELOPMENT.--A MUNICIPALITY WHICH FILES
    13  A MUNICIPAL DEBT ADJUSTMENT ACTION UNDER FEDERAL LAW, WHETHER OR
    14  NOT A PROCEEDING UNDER THIS ACT HAD BEEN COMMENCED AS OF THE
    15  DATE OF SUCH FILING, SHALL UTILIZE THE PROCEDURES SET UP BY THIS
    16  ACT CONCURRENTLY WITH THE PROCESSING OF THE FEDERAL ACTION, SO
    17  AS TO EFFICIENTLY EXPEDITE THE FORMULATION OF A PLAN, ITS TIMELY
    18  CONFIRMATION BY THE FEDERAL COURT HAVING JURISDICTION OF THE
    19  FEDERAL ACTION AND ITS ADOPTION BY ORDINANCE.
    20     (C)  PLAN IMPLEMENTATION.--AFTER ADOPTION OF A PLAN BY THE
    21  MUNICIPALITY AS AN ORDINANCE AND CONFIRMATION OF THE PLAN BY THE
    22  FEDERAL COURT, IMPLEMENTATION OF THE PLAN SHALL BE COORDINATED
    23  THROUGH THIS ACT AND IN ACCORDANCE WITH REQUIREMENTS SET BY THE
    24  FEDERAL COURT.
    25  SECTION 264.  SUSPENSION OF COMMONWEALTH FUNDING.
    26     (A)  GENERAL RULE.--A MUNICIPALITY WHICH REMAINS CLASSIFIED
    27  AS FINANCIALLY DISTRESSED BY THE DEPARTMENT AND HAS FAILED TO
    28  ADOPT OR IMPLEMENT A PLAN WITHIN A PERIOD SET BY THE FEDERAL
    29  COURT, OR HAS FAILED OR REFUSED TO FOLLOW A RECOMMENDATION BY A
    30  COORDINATOR, SHALL BE NOTIFIED IN WRITING BY THE COORDINATOR
    19870S0864B1258                 - 35 -

     1  THAT HE IS REQUESTING THE SECRETARY TO ISSUE A SUSPENSION OF
     2  COMMONWEALTH FUNDING TO THE MUNICIPALITY FOR ITS FAILURE TO TAKE
     3  THE STEPS ENUMERATED IN THE NOTICE.
     4     (B)  MUNICIPALITY'S RESPONSE.--THE MUNICIPALITY SHALL HAVE
     5  TEN DAYS FROM THE DATE OF THE COORDINATOR'S NOTICE IN WHICH TO
     6  SHOW CAUSE TO THE SECRETARY AND THE COORDINATOR WHY COMMONWEALTH
     7  FUNDING TO THE MUNICIPALITY SHOULD NOT BE SUSPENDED.
     8     (C)  CERTIFICATION.--IF THE MUNICIPALITY HAS NOT ADEQUATELY
     9  SHOWN CAUSE TO THE SECRETARY AND COORDINATOR WHY SUCH ACTION
    10  SHOULD NOT BE TAKEN, THE SECRETARY, WITHIN 20 DAYS OF THE
    11  COORDINATOR'S REQUEST, SHALL CERTIFY TO THE MUNICIPALITY IN
    12  WRITING THAT EACH GRANT, LOAN, ENTITLEMENT OR PAYMENT BY THE
    13  COMMONWEALTH OR ANY OF ITS AGENCIES SHALL BE SUSPENDED PENDING
    14  ADOPTION OF A PLAN CALCULATED TO FULLY RESOLVE THE
    15  MUNICIPALITY'S FINANCIAL DISTRESS. SUSPENDED FUNDS SHALL BE HELD
    16  IN ESCROW BY THE COMMONWEALTH UNTIL THE SECRETARY HAS RESCINDED
    17  THE CERTIFICATION.
    18     (D)  EXCEPTION.--NOTWITHSTANDING THE PROVISIONS OF SUBSECTION
    19  (C), THE FOLLOWING FUNDS SHALL NOT BE WITHHELD FROM A
    20  MUNICIPALITY:
    21         (1)  CAPITAL PROJECTS UNDER CONTRACT IN PROGRESS.
    22         (2)  MONEYS RECEIVED BY A MUNICIPALITY FROM AN AGENCY OF
    23     THE COMMONWEALTH OR THE FEDERAL GOVERNMENT SUBSEQUENT TO THE
    24     DECLARATION OF A DISASTER RESULTING FROM A CATASTROPHE.
    25         (3)  PENSION FUND DISBURSEMENTS MADE PURSUANT TO STATE
    26     LAW.
    27         (4)  A GRANT OR LOAN MADE PURSUANT TO SECTION 302(B) OF
    28     THIS ACT.
    29                             CHAPTER 3
    30       EMERGENCY FINANCIAL AID FOR DISTRESSED MUNICIPALITIES
    19870S0864B1258                 - 36 -

     1  SECTION 301.  PROGRAM.
     2     (A)  ESTABLISHMENT.--THERE IS HEREBY ESTABLISHED WITHIN THE
     3  DEPARTMENT A PROGRAM TO PROVIDE EMERGENCY GRANTS AND LOANS TO
     4  MUNICIPALITIES DECLARED TO BE DISTRESSED IN ACCORDANCE WITH THIS
     5  ACT.
     6     (B)  NATURE OF LOANS.--ALL LOANS GRANTED BY THE DEPARTMENT
     7  SHALL BE FREE FROM INTEREST AND REPAYABLE ACCORDING TO A
     8  COVENANT SETTING FORTH A SCHEDULE FOR REPAYMENT IN AMOUNTS AND
     9  ON DATES SPECIFIED IN THE COVENANT, WHICH SCHEDULE SHALL CONFORM
    10  WITH A PLAN ADOPTED AND IMPLEMENTED UNDER THIS ACT.
    11  SECTION 302.  GRANT AND LOAN PROCEDURE.
    12     (A)  GENERAL PROVISIONS.--A FINANCIALLY DISTRESSED
    13  MUNICIPALITY OR THE COORDINATOR MAY APPLY TO THE SECRETARY FOR A
    14  GRANT OR LOAN SUBSEQUENT TO THE ADOPTION OF A PLAN BY A
    15  MUNICIPALITY PURSUANT TO CHAPTER 2. IN CASES WHERE THE PLAN
    16  FINALLY ADOPTED HAS BEEN FORMULATED BY THE CHIEF EXECUTIVE
    17  OFFICER OR GOVERNING BODY, THE CHIEF EXECUTIVE OFFICER OR A
    18  PERSON DESIGNATED BY THE GOVERNING BODY MAY APPLY TO THE
    19  SECRETARY FOR A GRANT OR LOAN.
    20     (B)  IMMEDIATE EMERGENCIES.--IN CASES WHERE A MUNICIPALITY
    21  HAS BEEN DECLARED DISTRESSED BUT PRIOR TO FINAL ADOPTION OF A
    22  PLAN, THE MUNICIPALITY OR THE COORDINATOR APPOINTED MAY APPLY TO
    23  THE DEPARTMENT FOR AN EXPEDITED LOAN OR GRANT TO IMMEDIATELY
    24  ASSIST THE DISTRESSED MUNICIPALITY IF EITHER OF THE FOLLOWING
    25  CONDITIONS EXISTS:
    26         (1)  THE APPLICANT VERIFIES THAT HE BELIEVES THE
    27     MUNICIPALITY IS IN IMMINENT DANGER OF INSOLVENCY.
    28         (2)  THE APPLICANT VERIFIES THAT HE BELIEVES THERE IS A
    29     CLEAR AND PRESENT DANGER TO THE HEALTH AND SAFETY OF
    30     RESIDENTS OF THE MUNICIPALITY.
    19870S0864B1258                 - 37 -

     1     (C)  APPROVAL.--
     2         (1)  UPON RECEIPT OF AN APPLICATION UNDER SUBSECTION (A),
     3     THE SECRETARY SHALL SET A DATE FOR A HEARING TO BE HELD NOT
     4     SOONER THAN TEN DAYS NOR LATER THAN 30 DAYS FROM THE DATE OF
     5     RECEIPT OF THE APPLICATION. AT THE HEARING THE SECRETARY
     6     SHALL RECEIVE EVIDENCE WHICH SETS FORTH THE NECESSITY FOR THE
     7     MONEYS REQUESTED. THE HEARING SHALL BE CONDUCTED AT AN
     8     ACCEPTABLE LOCATION WITHIN THE MUNICIPALITY TO ACCOMMODATE
     9     ALL INTERESTED PARTIES. IF SATISFIED THAT SUFFICIENT EVIDENCE
    10     EXISTS TO WARRANT A GRANT OR LOAN, THE SECRETARY SHALL
    11     APPROVE THE APPLICATION AND ORDER THE DEPARTMENT TO
    12     DISTRIBUTE MONEYS REQUESTED SUBJECT TO THE LIMITATIONS SET
    13     FORTH IN SECTION 303(C).
    14         (2)  UPON RECEIPT OF AN APPLICATION UNDER SUBSECTION (B),
    15     THE SECRETARY SHALL REVIEW ALL DATA IMMEDIATELY AVAILABLE AND
    16     SHALL DETERMINE WHETHER EMERGENCY FUNDS ARE WARRANTED. IF
    17     WARRANTED, THE SECRETARY SHALL APPROVE THE APPLICATION AND
    18     ORDER THE DEPARTMENT TO DISTRIBUTE MONEYS REQUESTED. THE
    19     SECRETARY OR THE APPLICANT MAY REQUEST A HEARING TO PROVIDE
    20     ADDITIONAL EVIDENCE OF EMERGENCY NEED, BUT IF REQUESTED, THE
    21     HEARING SHALL BE HELD NOT LATER THAN 15 DAYS FROM THE DATE
    22     THE APPLICATION IS RECEIVED.
    23  EITHER DETERMINATION IS APPEALABLE UNDER TITLE 2 OF THE
    24  PENNSYLVANIA CONSOLIDATED STATUTES (RELATING TO ADMINISTRATIVE
    25  LAW AND PROCEDURES).
    26  SECTION 303.  LIMITATIONS.
    27     (A)  USE.--A LOAN OR GRANT GIVEN TO A FINANCIALLY DISTRESSED
    28  MUNICIPALITY UNDER THIS ACT SHALL BE USED SOLELY FOR THE PAYMENT
    29  OF CURRENT EXPENSES OF THE MUNICIPALITY. CURRENT EXPENSES SO
    30  PAID SHALL NOT CONSTITUTE "DEBT" OR "UNFUNDED DEBT" AS DEFINED
    19870S0864B1258                 - 38 -

     1  IN THE ACT OF JULY 12, 1972 (P.L.781, NO.185), KNOWN AS THE
     2  LOCAL GOVERNMENT UNIT DEBT ACT, AND SHALL NOT BE SUBJECT TO THE
     3  PROVISIONS OF THAT ACT.
     4     (B)  ELIGIBILITY.--CITIES OF THE FIRST AND SECOND CLASS AND
     5  COUNTIES MAY NOT APPLY FOR A GRANT OR LOAN UNDER THIS ACT.
     6     (C)  AMOUNT.--THE SECRETARY SHALL NOT APPROVE AN APPLICATION
     7  TO ANY ONE MUNICIPALITY FOR AN AMOUNT WHICH WILL SUBSTANTIALLY
     8  IMPAIR THE DEPARTMENT'S ABILITY TO DISTRIBUTE THE REMAINING SUM
     9  FAIRLY AND EQUITABLY TO OTHER APPLICANTS OR POTENTIAL
    10  APPLICANTS.
    11  SECTION 304.  EXPIRATION.
    12     THIS CHAPTER SHALL EXPIRE JUNE 30, 1990.
    13                             CHAPTER 4
    14         CONSOLIDATION OR MERGER OF ECONOMICALLY NONVIABLE
    15                           MUNICIPALITIES
    16                            SUBCHAPTER A
    17                         GENERAL PROVISIONS
    18  SECTION 401.  DETERMINATION.
    19     IF A MUNICIPALITY HAS BEEN DETERMINED TO BE FINANCIALLY
    20  DISTRESSED PURSUANT TO THIS ACT AND THE COORDINATOR HAS FURTHER
    21  DETERMINED UNDER SECTION 241 THAT CONSOLIDATION OR MERGER OF THE
    22  MUNICIPALITY WITH AN ADJACENT MUNICIPALITY OR MUNICIPALITIES IS
    23  IN THE PUBLIC INTEREST, THEN THE MUNICIPALITY MAY UTILIZE THE
    24  PROVISIONS OF THIS CHAPTER.
    25  SECTION 402.  PROCEDURE FOR CONSOLIDATION OR MERGER.
    26     TWO OR MORE MUNICIPALITIES MAY BE CONSOLIDATED OR MERGED INTO
    27  A SINGLE MUNICIPALITY, WHETHER WITHIN THE SAME OR DIFFERENT
    28  COUNTIES, IF EACH OF THE MUNICIPALITIES IS CONTIGUOUS TO AT
    29  LEAST ONE OF THE OTHER CONSOLIDATING OR MERGING MUNICIPALITIES,
    30  AND IF TOGETHER SUCH MUNICIPALITIES WOULD FORM A CONSOLIDATED OR
    19870S0864B1258                 - 39 -

     1  MERGED MUNICIPALITY. CONSOLIDATION OR MERGER MAY BE COMMENCED BY
     2  ONE OF THE FOLLOWING:
     3         (1)  JOINT AGREEMENT OF THE GOVERNING BODIES OF THE
     4     MUNICIPALITIES PROPOSED FOR CONSOLIDATION OR MERGER APPROVED
     5     BY ORDINANCE.
     6         (2)  INITIATIVE OF ELECTORS.
     7  SECTION 403.  JOINT AGREEMENT OF GOVERNING BODIES.
     8     (A)  GENERAL RULE.--THE GOVERNING BODY OF EACH MUNICIPALITY
     9  TO BE CONSOLIDATED OR MERGED SHALL ENTER INTO A JOINT AGREEMENT
    10  UNDER THE OFFICIAL SEAL OF EACH MUNICIPALITY TO CONSOLIDATE OR
    11  MERGE INTO ONE MUNICIPALITY.
    12     (B)  ELEMENTS.--THE JOINT AGREEMENT SHALL SET FORTH:
    13         (1)  THE NAME OF EACH MUNICIPALITY THAT IS A PARTY TO THE
    14     AGREEMENT.
    15         (2)  THE NAME AND THE TERRITORIAL BOUNDARIES OF THE
    16     CONSOLIDATED OR MERGED MUNICIPALITY.
    17         (3)  THE TYPE AND CLASS OF THE CONSOLIDATED OR MERGED
    18     MUNICIPALITY.
    19         (4)  WHETHER THE CONSOLIDATED OR MERGED MUNICIPALITY
    20     SHALL BE GOVERNED SOLELY BY THE CODE AND OTHER GENERAL LAWS
    21     APPLICABLE TO THE KIND AND CLASS OF THE CONSOLIDATED OR
    22     MERGED MUNICIPALITY OR WHETHER IT SHALL BE GOVERNED BY A HOME
    23     RULE CHARTER OR AN OPTIONAL PLAN OF GOVERNMENT PREVIOUSLY
    24     ADOPTED BY ONE OF THE CONSOLIDATING OR MERGING
    25     MUNICIPALITIES.
    26         (5)  THE NUMBER OF WARDS, IF ANY, INTO WHICH THE
    27     CONSOLIDATED OR MERGED MUNICIPALITY WILL BE DIVIDED FOR THE
    28     PURPOSE OF ELECTING ALL OR SOME MEMBERS OF ITS GOVERNING
    29     BODY.
    30         (6)  TERMS FOR:
    19870S0864B1258                 - 40 -

     1             (I)  THE DISPOSITION OF EXISTING ASSETS OF EACH
     2         MUNICIPALITY.
     3             (II)  THE LIQUIDATION OF EXISTING INDEBTEDNESS OF
     4         EACH MUNICIPALITY.
     5             (III)  THE ASSUMPTION, ASSIGNMENT OR DISPOSITION OF
     6         EXISTING LIABILITIES OF EACH MUNICIPALITY, EITHER
     7         JOINTLY, SEPARATELY OR IN CERTAIN DEFINED PROPORTIONS, BY
     8         SEPARATE RATES OF TAXATION WITHIN EACH OF THE CONSTITUENT
     9         MUNICIPALITIES UNTIL CONSOLIDATION OR MERGER BECOMES
    10         EFFECTIVE PURSUANT TO SECTION 407.
    11             (IV)  THE IMPLEMENTATION OF A LEGALLY CONSISTENT
    12         UNIFORM TAX SYSTEM THROUGHOUT THE CONSOLIDATED OR MERGED
    13         MUNICIPALITY WHICH PROVIDES THE REVENUE NECESSARY TO FUND
    14         REQUIRED MUNICIPAL SERVICES.
    15         (7)  THE GOVERNMENTAL ORGANIZATION OF THE CONSOLIDATED OR
    16     MERGED MUNICIPALITY INSOFAR AS IT CONCERNS ELECTED OFFICERS.
    17         (8)  A TRANSITIONAL PLAN AND SCHEDULE APPLICABLE TO
    18     ELECTED OFFICERS. THE TRANSITIONAL PLAN SHALL PROVIDE FOR THE
    19     ABOLITION OF THE ELECTED OFFICES OF EACH COMPONENT
    20     MUNICIPALITY AND THE TERMINATION OF THE TERMS OF OFFICE OF
    21     THE ELECTED OFFICIALS OF EACH MUNICIPALITY AND FOR THE
    22     ELECTION OF THE FIRST OFFICERS OF THE CONSOLIDATED OR MERGED
    23     MUNICIPALITY SO THAT ELECTION AND TENURE SHALL CONFORM TO
    24     THOSE IN OTHER MUNICIPALITIES OF THE SAME KIND AND CLASS IN
    25     THE COMMONWEALTH WITH PROPERLY STAGGERED TERMS WHERE REQUIRED
    26     OR DESIRED.
    27         (9)  THE COMMON ADMINISTRATION AND ENFORCEMENT OF
    28     ORDINANCES ENFORCED UNIFORMLY WITHIN THE CONSOLIDATED OR
    29     MERGED MUNICIPALITY.
    30  SECTION 404.  INITIATIVE OF ELECTORS.
    19870S0864B1258                 - 41 -

     1     (A)  GENERAL RULE.--IN ORDER FOR CONSOLIDATION OR MERGER
     2  PROCEEDINGS TO BE INITIATED BY PETITION OF ELECTORS, PETITIONS
     3  CONTAINING SIGNATURES OF AT LEAST 5% OF THE ELECTORS VOTING FOR
     4  THE OFFICE OF GOVERNOR IN THE LAST GUBERNATORIAL GENERAL
     5  ELECTION IN EACH MUNICIPALITY PROPOSED TO BE CONSOLIDATED OR
     6  MERGED SHALL BE FILED WITH THE COUNTY BOARD OF ELECTIONS OF THE
     7  COUNTY IN WHICH THE MUNICIPALITY, OR THE GREATER PORTION OF ITS
     8  TERRITORY, IS LOCATED.
     9     (B)  NOTICE TO GOVERNING BODIES AFFECTED.--WHEN ELECTION
    10  OFFICIALS FIND THAT A PETITION IS IN PROPER ORDER, THEY SHALL
    11  SEND COPIES OF THE INITIATIVE PETITION WITHOUT THE SIGNATURES
    12  THEREON TO THE GOVERNING BODIES OF EACH OF THE MUNICIPALITIES
    13  AFFECTED BY THE PROPOSED CONSOLIDATION OR MERGER.
    14     (C)  CONTENTS.--A PETITION SHALL SET FORTH:
    15         (1)  THE NAME OF THE MUNICIPALITY FROM WHICH THE SIGNERS
    16     OF THE PETITION WERE OBTAINED.
    17         (2)  THE NAMES OF THE MUNICIPALITIES PROPOSED TO BE
    18     CONSOLIDATED OR MERGED.
    19         (3)  THE NAME OF THE CONSOLIDATED OR MERGED MUNICIPALITY.
    20         (4)  THE TYPE AND CLASS OF THE CONSOLIDATED OR MERGED
    21     MUNICIPALITY.
    22         (5)  WHETHER THE CONSOLIDATED OR MERGED MUNICIPALITY
    23     SHALL BE GOVERNED SOLELY BY THE CODE AND OTHER GENERAL LAWS
    24     APPLICABLE TO THE KIND AND CLASS OF THE CONSOLIDATED OR
    25     MERGED MUNICIPALITY, OR WHETHER IT SHALL BE GOVERNED BY A
    26     HOME RULE CHARTER OR AN OPTIONAL PLAN OF GOVERNMENT
    27     PREVIOUSLY ADOPTED BY ONE OF THE CONSOLIDATING OR MERGING
    28     MUNICIPALITIES.
    29         (6)  THE NUMBER OF WARDS, IF ANY, INTO WHICH THE
    30     CONSOLIDATED OR MERGED MUNICIPALITY WILL BE DIVIDED FOR THE
    19870S0864B1258                 - 42 -

     1     PURPOSE OF ELECTING ALL OR SOME MEMBERS OF ITS GOVERNING
     2     BODY.
     3     (D)  FILING OF PETITION.--THE CONSOLIDATION OR MERGER
     4  PETITION SHALL BE FILED WITH THE ELECTION OFFICIALS NOT LATER
     5  THAN THE 13TH TUESDAY PRIOR TO THE NEXT PRIMARY, MUNICIPAL OR
     6  GENERAL ELECTION. THE PETITION AND PROCEEDINGS THEREIN SHALL BE
     7  IN THE MANNER AND SUBJECT TO THE PROVISIONS OF THE ELECTION LAWS
     8  WHICH RELATE TO THE SIGNING, FILING AND ADJUDICATION OF
     9  NOMINATION PETITIONS INSOFAR AS SUCH PROVISIONS ARE APPLICABLE,
    10  EXCEPT THAT NO REFERENDUM PETITION SHALL BE SIGNED OR CIRCULATED
    11  PRIOR TO THE 20TH TUESDAY BEFORE THE ELECTION, NOR LATER THAN
    12  THE 13TH TUESDAY BEFORE THE ELECTION.
    13  SECTION 405.  CONDUCT OF REFERENDA.
    14     (A)  DUTY TO PLACE ON BALLOT.--FOLLOWING INITIATION OF
    15  PROCEEDINGS FOR CONSOLIDATION OR MERGER BY THE PROCEDURES SET
    16  FORTH EITHER IN SECTION 403 OR 404, THE QUESTION OF
    17  CONSOLIDATION OR MERGER SHALL BE PLACED BEFORE THE ELECTORS OF
    18  EACH OF THE MUNICIPALITIES PROPOSED TO BE CONSOLIDATED OR
    19  MERGED. A REFERENDUM SHALL BE HELD AT THE FIRST PRIMARY,
    20  MUNICIPAL OR GENERAL ELECTION AFTER EITHER:
    21         (1)  THE DATE OF THE GENERAL AGREEMENT ENTERED INTO UNDER
    22     THE PROVISIONS OF SECTION 403; OR
    23         (2)  THE DATE OF FILING OF THE PETITION FILED UNDER THE
    24     PROVISIONS OF SECTION 404.
    25     (B)  APPROVAL.--CONSOLIDATION OR MERGER SHALL NOT BE
    26  EFFECTIVE UNLESS THE REFERENDUM QUESTION IS APPROVED BY A
    27  MAJORITY OF THE ELECTORS VOTING IN EACH OF THE MUNICIPALITIES IN
    28  WHICH THE REFERENDUM IS HELD. IF IN ANY ONE OF THE
    29  MUNICIPALITIES IN WHICH THE REFERENDUM IS HELD A MAJORITY IN
    30  FAVOR OF CONSOLIDATION OR MERGER DOES NOT RESULT, THE REFERENDUM
    19870S0864B1258                 - 43 -

     1  SHALL FAIL AND CONSOLIDATION OR MERGER SHALL NOT TAKE PLACE. THE
     2  QUESTION DESCRIBED IN THE CONSOLIDATION OR MERGER PROPOSAL SHALL
     3  NOT BE VOTED ON AGAIN FOR A PERIOD OF FIVE YEARS.
     4  SECTION 406.  CONSOLIDATION OR MERGER AGREEMENT.
     5     (A)  FORM.--UPON FAVORABLE ACTION BY THE ELECTORATE ON
     6  CONSOLIDATION OR MERGER, IN CASES WHERE CONSOLIDATION OR MERGER
     7  WAS INITIATED OTHERWISE THAN BY JOINT AGREEMENT OF MUNICIPAL
     8  GOVERNING BODIES UNDER SECTION 403, THE GOVERNING BODIES OF THE
     9  MUNICIPALITIES TO BE CONSOLIDATED OR MERGED SHALL MEET WITHIN 60
    10  DAYS AFTER THE CERTIFICATION OF THE FAVORABLE VOTE AND SHALL
    11  MAKE A CONSOLIDATION OR MERGER AGREEMENT, AS FOLLOWS:
    12         (1)  IF THE GOVERNING BODY, OR PART OF THE GOVERNING
    13     BODY, OF THE CONSOLIDATED OR MERGED MUNICIPALITY IS TO BE
    14     ELECTED ON A WARD BASIS, THE AGREEMENT SHALL SET FORTH THE
    15     WARD BOUNDARIES AND THE WARD DESIGNATION, BY NUMBER, AND THE
    16     NUMBER OF MEMBERS OF THE MUNICIPAL GOVERNING BODY TO BE
    17     ELECTED FROM EACH WARD.
    18         (2)  THE AGREEMENT SHALL SET FORTH TERMS FOR:
    19             (I)  THE DISPOSITION OF THE EXISTING ASSETS OF EACH
    20         MUNICIPALITY.
    21             (II)  THE LIQUIDATION OF THE EXISTING INDEBTEDNESS OF
    22         EACH MUNICIPALITY.
    23             (III)  THE ASSUMPTION, ASSIGNMENT, AND DISPOSITION OF
    24         THE EXISTING LIABILITIES OF EACH MUNICIPALITY, EITHER
    25         JOINTLY, SEPARATELY OR IN CERTAIN DEFINED PROPORTIONS, BY
    26         SEPARATE RATES OF TAXATION WITHIN EACH OF THE CONSTITUENT
    27         MUNICIPALITIES UNTIL CONSOLIDATION OR MERGER BECOMES
    28         EFFECTIVE PURSUANT TO SECTION 407.
    29         (3)  THE AGREEMENT SHALL SET FORTH THE GOVERNMENTAL
    30     ORGANIZATION OF THE CONSOLIDATED OR MERGED MUNICIPALITY,
    19870S0864B1258                 - 44 -

     1     INSOFAR AS IT CONCERNS ELECTED OFFICERS, AND SHALL CONTAIN A
     2     TRANSITIONAL PLAN AND SCHEDULE APPLICABLE TO ELECTED
     3     OFFICERS. THE AGREEMENT SHALL PROVIDE FOR THE ABOLITION OF
     4     ELECTED OFFICES AND FOR THE TERMINATION OF THE TERMS OF
     5     OFFICE OF ELECTED OFFICERS OF EACH MUNICIPALITY BEING MERGED
     6     OR CONSOLIDATED, AND THE ELECTION OF THE FIRST OFFICERS OF
     7     THE CONSOLIDATED OR MERGED MUNICIPALITY SO THAT ELECTION AND
     8     TENURE SHALL CONFORM TO THOSE IN OTHER MUNICIPALITIES OF THE
     9     SAME KIND AND CLASS IN THE COMMONWEALTH, WITH PROPERLY
    10     STAGGERED TERMS, WHERE REQUIRED OR DESIRED.
    11         (4)  THE AGREEMENT SHALL PROVIDE FOR COMMON
    12     ADMINISTRATION AND ENFORCEMENT OF ORDINANCES TO BE ENFORCED
    13     UNIFORMLY WITHIN THE CONSOLIDATED OR MERGED MUNICIPALITY.
    14         (5)  THE AGREEMENT SHALL ALSO PROVIDE, CONSISTENT WITH
    15     EXITING LAW, FOR THE IMPLEMENTATION OF AN UNIFORM TAX SYSTEM
    16     THROUGHOUT THE CONSOLIDATED OR MERGED MUNICIPALITY WHICH
    17     SHALL PROVIDE THE REVENUE NECESSARY TO FUND REQUIRED
    18     MUNICIPAL SERVICES.
    19     (B)  FILING.--A COPY OF THE CONSOLIDATION OR MERGER AGREEMENT
    20  SHALL BE FILED WITH THE DEPARTMENT OF COMMUNITY AFFAIRS, THE
    21  DEPARTMENT OF TRANSPORTATION, THE GOVERNOR'S OFFICE OF POLICY
    22  DEVELOPMENT OR ITS SUCCESSOR, THE DEPARTMENT OF EDUCATION, STATE
    23  TAX EQUALIZATION BOARD, THE LEGISLATIVE REAPPORTIONMENT
    24  COMMISSION AND THE COURT OF COMMON PLEAS AND THE BOARD OF COUNTY
    25  COMMISSIONERS OF THE COUNTY OR COUNTIES IN WHICH MUNICIPALITIES
    26  AFFECTED ARE LOCATED.
    27  SECTION 407.  EFFECTUATION OF CONSOLIDATION OR MERGER.
    28     MUNICIPALITIES CONSOLIDATED OR MERGED SHALL CONTINUE TO BE
    29  GOVERNED AS BEFORE CONSOLIDATION OR MERGER UNTIL THE FIRST
    30  MONDAY OF JANUARY FOLLOWING THE MUNICIPAL ELECTION NEXT
    19870S0864B1258                 - 45 -

     1  SUCCEEDING THE ELECTION AT WHICH CONSOLIDATION OR MERGER
     2  REFERENDA WERE HELD. AT THAT MUNICIPAL ELECTION, THE NECESSARY
     3  OFFICERS OF THE CONSOLIDATED OR MERGED MUNICIPALITY SHALL BE
     4  ELECTED IN ACCORDANCE WITH THE TERMS OF THE GENERAL LAW
     5  AFFECTING MUNICIPALITIES OF THE KIND OR CLASS OF THE
     6  CONSOLIDATED OR MERGED MUNICIPALITY, OR, IN CASE OF A
     7  CONSOLIDATED OR MERGED MUNICIPALITY OPERATING UNDER A HOME RULE
     8  CHARTER OR OPTIONAL PLAN OF GOVERNMENT, IN ACCORDANCE WITH THE
     9  CHARTER OR OPTIONAL PLAN OR WITH GENERAL LAW AFFECTING HOME RULE
    10  OR OPTIONAL PLAN MUNICIPALITIES, AS APPLICABLE. THE OFFICERS
    11  ELECTED AT THAT MUNICIPAL ELECTION SHALL BE ELECTED FOR TERMS OF
    12  OFFICE UNDER THE PLAN AND SCHEDULE SET FORTH IN THE
    13  CONSOLIDATION OR MERGER AGREEMENT AUTHORIZED BY SECTION 403 OR
    14  406, AS THE CASE MAY BE. THEY SHALL TAKE OFFICE AS OFFICERS OF
    15  THE CONSOLIDATED OR MERGED MUNICIPALITY ON THE FIRST MONDAY OF
    16  JANUARY FOLLOWING THE MUNICIPAL ELECTION AT WHICH THEY WERE
    17  ELECTED, AND THEREUPON, THE CONSOLIDATED OR MERGED MUNICIPALITY
    18  SHALL BEGIN TO FUNCTION AND THE FORMER MUNICIPALITIES
    19  CONSOLIDATED OR MERGED INTO IT SHALL BE ABOLISHED.
    20  SECTION 408.  COLLECTIVE BARGAINING AGREEMENTS; FURLOUGH OF
    21                 EMPLOYEES; DISPUTES.
    22     (A)  COLLECTIVE BARGAINING CONTRACTS, AGREEMENTS OR
    23  ARBITRATION AWARDS.--A COLLECTIVE BARGAINING AGREEMENT OR
    24  CONTRACT IN EXISTENCE IN A MUNICIPALITY OR AN ARBITRATION AWARD
    25  IN EFFECT IN A MUNICIPALITY PRIOR TO A CONSOLIDATION OR MERGER
    26  SHALL REMAIN EFFECTIVE AFTER CONSOLIDATION OR MERGER UNTIL THE
    27  CONTRACT, AGREEMENTS, OR AWARDS EXPIRE. AFTER THE EXPIRATION OF
    28  THE CONTRACTS, AGREEMENTS OR AWARDS, A SUBSEQUENT COLLECTIVE
    29  BARGAINING AGREEMENT, CONTRACT OR AWARD SHALL NOT IMPAIR THE
    30  IMPLEMENTATION OF A PLAN ADOPTED PURSUANT TO THIS ACT.
    19870S0864B1258                 - 46 -

     1     (B)  REDUCTION IN EXISTING WORK FORCE.--SUBSEQUENT TO
     2  CONSOLIDATION OR MERGER, THE CONSOLIDATED OR MERGED MUNICIPALITY
     3  MAY, IN ACCORDANCE WITH EXISTING CONTRACTS OR ARBITRATION AWARD
     4  PROVISIONS AND CONSISTENT WITH APPLICABLE LAWS, REDUCE THE
     5  NUMBER OF UNIFORMED AND NONUNIFORMED EMPLOYEES TO AVOID
     6  OVERSTAFFING AND DUPLICATION OF POSITIONS IN THE CONSOLIDATED OR
     7  MERGED MUNICIPALITY. IF A CONSOLIDATED OR MERGED MUNICIPALITY
     8  DETERMINES IN ITS DISCRETION THAT IT IS NECESSARY TO INCREASE
     9  THE NUMBER OF UNIFORMED OR NONUNIFORMED EMPLOYEES, EMPLOYEES OF
    10  THE CONSTITUENT MUNICIPALITIES SHALL BE REINSTATED IN THE ORDER
    11  OF THEIR SENIORITY IF THEY HAD BEEN PREVIOUSLY FURLOUGHED.
    12     (C)  DISPUTES.--THE PENNSYLVANIA LABOR RELATIONS BOARD SHALL
    13  HAVE JURISDICTION TO DETERMINE LABOR DISPUTES OR CONTROVERSIES,
    14  EXCEPT THOSE ARISING OUT OF INTERPRETATION OR CONSTRUCTION OF A
    15  COLLECTIVE BARGAINING AGREEMENT CONTAINING PROVISION FOR BINDING
    16  ARBITRATION, BETWEEN THE CONSOLIDATED OR MERGED MUNICIPALITY AND
    17  ITS EMPLOYEES.
    18     (D)  EFFECT ON EXISTING LAW.--NOTHING IN THIS SECTION SHALL
    19  PROHIBIT A CONSOLIDATED OR MERGED MUNICIPALITY FROM EXERCISING
    20  ITS POWERS AND RESPONSIBILITIES PURSUANT TO PROVISIONS OF LAW
    21  RELATED TO COLLECTIVE BARGAINING, INCLUDING, BUT NOT LIMITED TO,
    22  THE ACT OF JUNE 24, 1968 (P.L.237, NO.111), REFERRED TO AS THE
    23  POLICEMEN AND FIREMEN COLLECTIVE BARGAINING ACT, AND THE ACT OF
    24  JULY 23, 1970 (P.L.563, NO.195), KNOWN AS THE PUBLIC EMPLOYE
    25  RELATIONS ACT.
    26  SECTION 409.  PROCEDURES.
    27     (A)  ORDINANCE BOOK.--AFTER CONSOLIDATION OR MERGER BECOMES
    28  EFFECTIVE, A NEW ORDINANCE BOOK SHALL BE USED BY THE
    29  MUNICIPALITY AND THE FIRST DOCUMENT TO BE RECORDED IN IT SHALL
    30  BE THE CONSOLIDATION OR MERGER AGREEMENT.
    19870S0864B1258                 - 47 -

     1     (B)  ORDINANCE CODIFICATION.--NO LATER THAN TWO YEARS AFTER
     2  CONSOLIDATION OR MERGER GOES INTO EFFECT, CODIFICATION OF ALL
     3  THE ORDINANCES OF THE MUNICIPALITY SHALL BE COMPLETED. THIS
     4  SHALL INCLUDE TABULATION OR INDEXING OF THOSE ORDINANCES OF THE
     5  COMPONENT MUNICIPALITIES THAT ARE OF PERMANENT EFFECT IN THE
     6  CONSOLIDATED OR MERGED MUNICIPALITY.
     7     (C)  VESTING OF RIGHTS, PRIVILEGES, PROPERTY AND
     8  OBLIGATIONS.--ALL RIGHTS, PRIVILEGES AND FRANCHISES OF EACH
     9  COMPONENT MUNICIPALITY AND ALL PROPERTY BELONGING TO EACH
    10  COMPONENT MUNICIPALITY SHALL BE VESTED IN THE CONSOLIDATED OR
    11  MERGED MUNICIPALITY. THE TITLE TO REAL ESTATE VESTED IN ANY OF
    12  THOSE MUNICIPALITIES SHALL NOT REVERT OR BE IN ANY WAY IMPAIRED
    13  BY REASON OF THE CONSOLIDATION OR MERGER. ALL LIENS AND RIGHTS
    14  OF CREDITORS SHALL BE PRESERVED. AGREEMENTS AND CONTRACTS SHALL
    15  REMAIN IN FORCE. DEBTS, LIABILITIES AND DUTIES OF EACH OF THE
    16  MUNICIPALITIES SHALL BE ATTACHED TO THE CONSOLIDATED OR MERGED
    17  MUNICIPALITY AND MAY BE ENFORCED AGAINST IT.
    18                            SUBCHAPTER B
    19                        ECONOMIC ASSISTANCE
    20  SECTION 421.  ELIGIBILITY.
    21     IN THE EVENT A MUNICIPALITY HAS BEEN DETERMINED TO BE
    22  DISTRESSED PURSUANT TO SECTION 203(F) AND HAS SUBSEQUENTLY
    23  CONSOLIDATED OR MERGED UNDER PROVISIONS OF THIS CHAPTER, THE
    24  CONSOLIDATED OR MERGED MUNICIPALITY SHALL BE ELIGIBLE FOR
    25  ECONOMIC AND COMMUNITY DEVELOPMENT ASSISTANCE AS PROVIDED IN
    26  SECTION 422.
    27  SECTION 422.  PRIORITY.
    28     NOTWITHSTANDING LAW TO THE CONTRARY, IF THE ELECTORS OF TWO
    29  OR MORE MUNICIPALITIES AT LEAST ONE OF WHICH HAS BEEN DETERMINED
    30  TO BE DISTRESSED PURSUANT TO SECTION 203(F), HAVE VOTED TO
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     1  APPROVE THE CONSOLIDATION OR MERGER OF THOSE MUNICIPALITIES, THE
     2  CONSOLIDATED OR MERGED MUNICIPALITY SHALL RECEIVE PRIORITY IN
     3  ALL ECONOMIC AND COMMUNITY DEVELOPMENT PROGRAMS FUNDED BY THE
     4  COMMONWEALTH. THE SECRETARY, UPON NOTIFICATION OF CONSOLIDATION
     5  OR MERGER OF SUCH MUNICIPALITIES SHALL NOTIFY COMMONWEALTH
     6  AGENCIES THAT THE CONSOLIDATED OR MERGED MUNICIPALITY SHALL
     7  RECEIVE PRIORITY IN FUNDING AS PROVIDED IN THIS SUBCHAPTER.
     8  NOTHING IN THIS SUBCHAPTER SHALL BE CONSTRUED TO GIVE PRIORITY
     9  OVER ECONOMIC AND COMMUNITY DEVELOPMENT ASSISTANCE ALREADY
    10  APPROVED AND ENCUMBERED BY THE COMMONWEALTH OR ITS AGENCIES TO
    11  ANY OF THE FOLLOWING:
    12         (1)  A MUNICIPALITY WHICH IS NOT FINANCIALLY DISTRESSED
    13     UNDER THIS ACT.
    14         (2)  A MUNICIPALITY WHICH HAS BEEN DECLARED DISTRESSED
    15     UNDER SECTION 203(F) BUT HAS NOT BEEN SUBJECTED TO THE
    16     FUNDING RESTRICTIONS UNDER SECTION 251 OR 264.
    17  SECTION 423.  LISTING OF ELIGIBLE MUNICIPALITIES.
    18     A CONSOLIDATED OR MERGED MUNICIPALITY WHICH IS GIVEN PRIORITY
    19  AS PROVIDED IN THIS SUBCHAPTER SHALL BE GIVEN PREFERENCE IN
    20  ECONOMIC AND COMMUNITY DEVELOPMENT ASSISTANCE OVER OTHER
    21  POTENTIAL ELIGIBLE MUNICIPALITIES ON THE BASIS OF THE DATE OF
    22  NOTIFICATION BY THE SECRETARY TO COMMONWEALTH AGENCIES AS
    23  PROVIDED IN SECTION 422.
    24                             CHAPTER 5
    25                              FUNDING
    26  SECTION 501.  APPROPRIATION.
    27     THE SUM OF $5,000,000, APPROPRIATED UNDER SECTION 210 OF THE
    28  ACT OF JULY 1, 1986 (P.L.1776, NO.5A), KNOWN AS THE GENERAL
    29  APPROPRIATION ACT OF 1986, SHALL BE USED TO CARRY OUT THE
    30  PROVISIONS OF THIS ACT. THE APPROPRIATION SHALL BE DISTRIBUTED
    19870S0864B1258                 - 49 -

     1  AS FOLLOWS:
     2         (1)  $500,000 SHALL BE USED BY THE DEPARTMENT FOR
     3     ADMINISTRATIVE EXPENSES NECESSARY TO CARRY OUT THE PROVISIONS
     4     OF THIS ACT.
     5         (2)  $4,500,000 SHALL BE USED TO PROVIDE GRANTS AND LOANS
     6     TO MUNICIPALITIES DETERMINED TO BE FINANCIALLY DISTRESSED
     7     PURSUANT TO THIS ACT.
     8                             CHAPTER 6
     9                        TECHNICAL PROVISIONS
    10  SECTION 601.  REPEALS.
    11     SECTION 2501-C(E) AND (F) OF THE ACT OF APRIL 9, 1929
    12  (P.L.177, NO.175), KNOWN AS THE ADMINISTRATIVE CODE OF 1929, ARE
    13  REPEALED INSOFAR AS THEY ARE INCONSISTENT WITH THIS ACT.
    14     THE ACT OF JUNE 11, 1935 (P.L.323, NO.146), ENTITLED "AN ACT
    15  DESIGNATING THE DEPARTMENT OF INTERNAL AFFAIRS AS THE AGENCY OF
    16  THE COMMONWEALTH TO APPROVE OR DISAPPROVE PETITIONS TO COURTS,
    17  AND PLANS FOR THE READJUSTMENT OF DEBTS OF POLITICAL
    18  SUBDIVISIONS, UNDER THE ACT OF CONGRESS RELATING TO THE
    19  BANKRUPTCY OF POLITICAL SUBDIVISIONS; AND DEFINING THE POWERS
    20  AND DUTIES OF SAID DEPARTMENT IN RELATION THERETO," IS REPEALED
    21  INSOFAR AS IT RELATED TO A MUNICIPALITY AS DEFINED IN SECTION
    22  103 OF THIS ACT.
    23  SECTION 602.  EXPIRATION.
    24     SECTION 203(A)(5) SHALL EXPIRE UPON PUBLICATION IN THE
    25  PENNSYLVANIA BULLETIN OF THE NOTICE REQUIRED UNDER SECTION
    26  121(G).
    27  SECTION 603.  EFFECTIVE DATE.
    28     THIS ACT SHALL TAKE EFFECT IN 60 DAYS.


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