1Amending the act of July 10, 1987 (P.L.246, No.47), entitled "An
2act empowering the Department of Community Affairs to declare
3certain municipalities as financially distressed; providing
4for the restructuring of debt of financially distressed
5municipalities; limiting the ability of financially
6distressed municipalities to obtain government funding;
7authorizing municipalities to participate in Federal debt
8adjustment actions and bankruptcy actions under certain
9circumstances; and providing for consolidation or merger of
10contiguous municipalities to relieve financial distress,"
11further providing for title of act; providing for declaration
12of fiscal emergencies and receivership in municipalities;
13authorizing certain taxes; providing for disincorporation of
14municipalities and the establishment of unincorporated
15service districts; establishing the Unincorporated Service
16District Trust Fund; and making extensive amendments,
17additions and editorial changes.

18The General Assembly of the Commonwealth of Pennsylvania
19hereby enacts as follows:

20Section 1. The title of the act of July 10, 1987 (P.L.246,
21No.47), known as the Municipalities Financial Recovery Act, is
22amended to read:

23AN ACT

24Amending the act of July 10, 1987 (P.L.246, No.47), entitled "An

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

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

16Section 102. Purpose and legislative intent.

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

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

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

30(i) Enact procedures to provide municipalities

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

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

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

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

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

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

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

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

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

15(i) constitutes a fiscal emergency; and

16(ii) signifies:

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

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

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

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

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

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

13Section 103. Definitions.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

21Section 121. Powers and duties of department.

22(a) Compile financial data.--

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

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

1applicable to the municipality's prior fiscal year.

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

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

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

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

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

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

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

12* * *

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

15Section 122. Duties of Commonwealth agencies.

16* * *

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

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

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

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

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

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

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

7Section 123. Powers and duties of municipalities.

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

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

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

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

1or both, beyond maximum rates provided by law.

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

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

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

30(i) the municipality has substantially implemented

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

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

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

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

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

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

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

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

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

27(2) A municipality that has levied a local services tax
28pursuant to paragraph (1) may continue to levy a local
29services tax at a rate in excess of $52 in accordance with
30paragraph (1) in any subsequent year, provided that a tax

1levied for any year after a termination of distressed status
2shall be authorized subject to all of the following:

3(i) A pension plan of the municipality has unfunded
4actuarial accrued pension liability.

5(ii) All revenue derived from that portion of the
6rate in excess of $52 shall be used solely to defray the
7municipality's unfunded actuarial accrued pension
8liability.

9(iii) The local services tax levied at a rate in
10excess of $52 may not be levied in the same year that the
11income of nonresidents is subject to a tax above maximum
12rates as provided in section 607(f) of the Municipal
13Pension Plan Funding Standard and Recovery Act.

14Section 141. Jurisdiction of court of common pleas.

15(a) Increases in tax rates.--The court of common pleas of
16each county shall have jurisdiction to hear a petition filed by
17a municipality which has adopted a [final] plan pursuant to
18Subchapter C or C.1 of Chapter 2 to increase rates of taxation
19for earned income on residents and nonresidents, real property,
20or both, beyond maximum rates provided by law in accordance with 
21section 123. The court may extend annually the increased taxing
22powers of the municipality until the termination date of the
23plan adopted by the municipality pursuant to Chapter 2.

<-24(a.1) Levy of payroll preparation tax.--The court of common
25pleas of each county shall have jurisdiction to hear a petition
26filed by a municipality which has adopted a plan pursuant to
27Subchapter C or C.1 of Chapter 2 to levy a payroll preparation
28tax authorized by section 123(c)(1.1).

29(a.2) Increase in local services tax.--The court of common
30pleas of each county shall have jurisdiction to hear a petition

1filed by a municipality which has adopted a plan pursuant to
2Subchapter C or C.1 of Chapter 2 to increase the rate of the
3local services tax in accordance with section 123(c)(1.1).

4(b) Involuntary compromises of delinquent taxes.--The court
5of common pleas of each county may hear a petition filed by at
6least two taxing authorities having taxing power over the
7properties within a municipality which has adopted a [final]
8plan pursuant to Subchapter C or C.1 of Chapter 2 if the
9petition requests a compromise of delinquent taxes due on a
10property in that municipality. The court may order the property
11to be sold at a sheriff's sale and the proceeds to be divided
12among all authorities which are owed taxes for the property
13sold. If the property is sold at sheriff's sale and if the
14proceeds are insufficient to satisfy tax liens on the property,
15the court shall order a proration of the sale proceeds among the
16taxing authorities which fixed the liens.

17Section 7. The act is amended by adding a chapter to read:

18CHAPTER 1-A

19EARLY INTERVENTION PROGRAM

20SUBCHAPTER A

21PRELIMINARY PROVISIONS

22Section 101-A. Definitions.

23The following words and phrases when used in this chapter
24shall have the meanings given them in this section unless the
25context clearly indicates otherwise:

26"Center." The Governor's Center for Local Government
27Services of the Department of Community and Economic Development
28of the Commonwealth.

29"Keystone Principles." The Keystone Principles and Criteria
30for Growth Investment and Resource Conservation adopted May 31,

12005, by the Economic Development Cabinet to foster and measure
2the effectiveness of sustainable economic development and
3conservation of resources through the investment of Commonwealth
4funds in its municipalities.

5"Program." The Early Intervention Program established by
6this chapter.

7Section 102-A. Program objectives.

8The Early Intervention Program established by this chapter
9provides a municipality with a preemptive step for the purpose
10of seeking guidance and assistance from the Commonwealth to
11develop long-term financial management, administrative, service
12delivery and economic development strategies that the
13municipality can implement to avert a fiscal crisis and provide
14fiscal stability. The specific objectives of the Early
15Intervention Program include the following and are meant to:

16(1) Provide the resources to assist a municipality in
17identifying, prioritizing and addressing the financial
18difficulties confronting it, while ensuring its short-term
19and long-term goals and objectives are adequately taken into
20account.

21(2) Engage in a management review of its operations and
22provide recommendations that will enhance financial
23administration, management and service delivery of a
24municipality.

25(3) Strengthen the ability of a municipality to develop,
26adopt, implement and monitor multiyear financial management
27plans and to incorporate the process into its annual budget
28process.

29(4) Implement a system of multiyear revenue and
30expenditure trend analysis, monitoring and forecasting so

1that a municipality can better anticipate and plan for future
2financial circumstances.

3(5) Promote multimunicipal and regional planning,
4cooperation strategies and cost-sharing opportunities between
5two or more municipalities.

6(6) Support the adoption by a municipality of best
7management practices and efficiency measures to increase the
8financial stability of a municipality.

9(7) Further the integration of sound community and
10economic development strategies to encourage the economic
11growth of the tax base of a municipality over a multiyear
12period.

13SUBCHAPTER B

14ADMINISTRATIVE PROVISIONS

15Section 103-A. Authorization.

16The Early Intervention Program is established to authorize
17the center to provide guidance and assistance through grants to
18a municipality seeking to ensure fiscal stability by developing
19and implementing long-term financial, managerial and economic
20development strategies.

21Section 104-A. Grants.

22(a) General rule.--A grant may be awarded by the center to a
23municipality or two or more municipalities cooperating together
24to ensure fiscal stability through the development and
25implementation of long-term financial, managerial and economic
26development strategies in an amount not exceeding $200,000
27during the first fiscal year that commences on the effective
28date of this section, adjusted for inflation in subsequent years
29by an amount not to exceed an annual cost-of-living adjustment
30calculated by applying the percentage change in the Consumer

1Price Index immediately prior to the date the adjustment is due
2to take effect. To be eligible for a grant for implementation
3funding, a municipality must meet the basic training
4requirements established in guidelines developed by the center.

5(b) Match.--The grant amount is subject to a 50% financial
6match by the municipality to which the grant was provided,
7unless the center determines a match by the municipality of a
8lesser amount not less than 10% is warranted. The center may
9authorize any portion of the municipality's financial match to
10be offset by an in-kind match.

11(c) Eligible activities.--A grant shall be used for the
12following eligible activities:

13(1) The development of multiyear financial management
14plan for a municipality.

15(2) The development of multimunicipal or regional
16intergovernmental cooperation initiatives and cost-sharing
17strategies.

18(3) A study to improve the management and operational
19practices and financial administration procedures of a
20municipality.

21(4) A merger or consolidation feasibility study.

22(5) The implementation of any of the eligible activities
23identified in paragraphs (1) through (4).

24(6) Training and capacity-building activities that meet
25basic requirements established in guidelines developed by the
26center which assist the municipality in the implementation of
27plan recommendations.

28(7) Contracts with professional consultants to develop
29and implement recommendations related to eligible activities.

<-30(8) An audit, prepared by an independent accountant or

1firm, as required by section 108-A.

2Section 105-A. Application.

3A program application must be submitted by the applicant
4municipality on a form prescribed by the department utilizing
5the electronic single application format and include or
6demonstrate all of the following:

7(1) The name and address of the municipality or, in the
8case of a multimunicipal application, the municipalities.

9(2) The name of a contact person.

10(3) The execution of a supporting resolution authorizing
11the submission of the application and committing the
12resources of the municipality or, in the case of a
13multimunicipal application, municipalities.

14(4) The single application shall be signed by the
15authorized officer of the municipality or, in the case of a
16multimunicipal application, municipalities.

17(5) Any other information required by the department.

18Section 106-A. Evaluation criteria.

19The center shall evaluate a program application on the basis
20of municipal financial characteristics and the quality of the
21proposed program, including the extent to which the program is
22estimated to improve the administrative, operational and
23financial management capacity of the applicant municipality. The
24following factors shall be considered in the evaluation:

25(1) The current and projected financial condition of the
26municipality.

27(2) The economic and demographic condition of the
28municipality.

29(3) The proactive measures the municipality has taken to
30manage its finances in a responsible manner, including

1attempts to reduce expenditures, increase revenues, adopt
2sound management practices, establish municipal priorities
3and adhere to generally accepted financial management, budget
4and financial reporting standards.

5(4) The extent to which the municipality has
6demonstrated its willingness and commitment to engage in a
7multimunicipal or regional strategy and has examined whether
8certain municipal services can be provided through a council
9of governments, a county government or other structure.

10(5) The extent to which the municipality has
11demonstrated its willingness and commitment to improve its
12financial and administrative operation through the adoption
13and implementation of a multiyear financial management plan.

14(6) Where it has received assistance and funding from
15the department, past performance by the municipality.

16(7) Where applicable, the elements of the Keystone
17Principles shall be included as part of the evaluation
18criteria.

19(8) Any other factors the center considers relevant.

20Section 107-A. Award.

21The secretary shall announce by letter applications selected
22for funding. The contact person specified in the application
23shall be sent the offer letter. All funding decisions shall be
24made subject to the availability of funds.

25Section 108-A. Guidelines.

26The department shall establish guidelines consistent with
27this chapter, particularly the program requirements and
28measurements to ensure a municipality is provided with adequate
29guidance. The program shall include a requirement of a financial
30audit of the municipality, prepared by an independent accountant

1or firm, for the fiscal year immediately preceding the
2application for funds under this chapter. The department may
3establish guidelines for the audit, and the requirement may be
4satisfied by any previous audit prepared in accordance with the
5guidelines.

6Section 8. Section 203(c) and (g) of the act, amended June
730, 1992 (P.L.336, No.69), are amended to read:

8Section 203. Procedure for determination.

9* * *

10(c) Investigation.--After receiving the request but before
11the public hearing, the secretary may make an investigation into
12the financial affairs of the municipality. The results of the
13investigation or any study previously conducted by the
14department <-or with department funds under Chapter 1-A or section
15121 shall be placed in the record of the public hearing.

16* * *

17(g) Appeal.--A determination by the secretary under this 
18[act] section is appealable pursuant to [Title 2 of the 
19Pennsylvania Consolidated Statutes (relating to administrative 
20law and procedure)] 2 Pa.C.S. Ch. 7 Subch. A (relating to 
21judicial review of Commonwealth agency action).

22Section 9. Sections 221(d) and (e), 222 and 223 of the act
23are amended to read:

24Section 221. Designation.

25* * *

26(d) Duties.--The coordinator shall [prepare and administer a
27plan designed to relieve the financial distress of the
28municipality which he has been appointed to serve.]:

29(1) Present, at a public meeting within 45 days of the
30execution of the contract between the department and the

1coordinator, a list of the coordinator's preliminary
2findings, as to the financial condition of municipality. The
3list of findings shall include, but is not limited to, a
4quantification of all operating deficits for the current
5fiscal year and a projection of revenues and operating
6expenses for the next three fiscal years, all outstanding
7debt obligations, the cost and term of all outstanding
8contracts, and other relevant information.

9(2) Solicit, not later than the date of the
10coordinator's presentation described in paragraph (1),
11comments <-in writing relating to the issues associated with
12the municipality's distress from such persons and entities
13who:

14(i) have participated in the early intervention
15process;

16(ii) have provided consultation on behalf of the
17municipality relating to the issues associated with its
18distress; or

19(iii) are elected officials or employees of the
20municipality or labor organizations representing
21employees of the municipality.

22(3) Consider all comments submitted within 30 days of
23the coordinator's presentation described in paragraph (1)
24before preparing and administering a plan designed to relieve
25the financial distress of the municipality which the
26coordinator has been appointed to serve.

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

28(1) Apply for grants and loans pursuant to Chapter 3, as
29[he] the coordinator deems necessary.

30(2) Investigate the tax-exempt status of any property

1within a distressed municipality and advise the governing
2body of the municipality to appeal the assessment or exempt
3status of property within the distressed municipality.

4(3) Solicit and negotiate payments in lieu of taxes from
5institutions of public charity and other tax-exempt property
6owners in the municipality <-and recommend action by the 
7municipality.

8Section 222. Access to information.

9(a) General rule.--The coordinator shall have full access to
10all municipal records.

11(b) Enforcement where records in possession of official or 
12public employee.--If the coordinator believes that an official
13or employee of the municipality or an authority is not answering
14questions accurately or completely or is not furnishing
15information requested, the coordinator may notify the official
16or employee in writing to furnish answers to questions or to
17furnish documents or records, or both. If the official or
18employee refuses, the coordinator may seek a subpoena in the
19court of common pleas to compel testimony and furnish records
20and documents. An action in mandamus shall lie to enforce the
21provisions of this section.

22(c) Enforcement where records in possession of other
23persons.--If the coordinator believes that a person is not
24furnishing information related to municipal records and that
25person is not subject to subsection (b), the coordinator may
26seek a subpoena in the court of common pleas to compel testimony
27and furnish records and documents.

28Section 223. Public and private meetings.

29(a) Public meetings authorized.--The coordinator may hold
30public meetings as defined in [the act of July 3, 1986 (P.L.388,
 

1No.84), known as the Sunshine Act] 65 Pa.C.S. Ch. 7 (relating to 
2open meetings), in connection with plan preparation.

3(b) Private meetings authorized.--Notwithstanding the
4provisions of [the Sunshine Act] 65 Pa.C.S. Ch. 7, private
5negotiation sessions may be conducted by the coordinator between
6the municipality and the individual creditors in an effort to
7obtain the consent of each creditor to the proposed adjustment
8and handling of specific claims against the municipality.

9Section 10. The act is amended by adding a section to read:

10Section 224.1. Performance of coordinator.

11(a) Review of coordinator.--Beginning on July 1, 2015, the
12secretary, or his designee, shall conduct an annual review of
13each coordinator appointed under section 221 to assess whether
14the coordinator's performance has been in compliance with the
15requirements of the coordinator's contract, if any, and the
16provisions of this act.

17(b) Termination of coordinator.--An unfavorable review under
18this section may constitute grounds for termination of the
19coordinator's contract for cause.

20Section 11. Section 241 of the act, amended or added June
2130, 1992 (P.L.336, No. 69) and July 5, 2012 (P.L.1104, No.133)
22and repealed in part October 13, 1994 (P.L.596, No.90), is
23amended to read:

24Section 241. Contents.

25A plan formulated by the appointed coordinator shall be
26consistent with applicable law and shall include any of the
27following factors which are relevant to alleviating the
28financially distressed status of the municipality:

29(1) Projections of revenues and expenditures for the
30current year and the next [three] five years, both assuming

1the continuation of present operations and as impacted by the
2measures in the plan. The projections must include an 
3itemization of the following:

4(i) Projected revenues, including:

5(A) Local taxes.

6(B) Licenses, permits and fines.

7(C) Sales and rentals.

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

9(E) Any other sources of projected revenue.

10(ii) Projected expenditures, including:

11(A) Debt service.

12(B) Workforce.

13(C) Elected and executive officials.

14(D) Financial management.

15(E) Infrastructure costs, including highways,
16roads and wastewater systems.

17(F) Maintenance costs, including recycling and
18trash collection, disposal and removal.

19(G) Other professional services.

20(H) Public safety.

21(I) Community and economic development.

22(J) Any other applicable expenditures.

23(2) Recommendations which will:

24(i) Satisfy judgments, past due accounts payable,
25and past due and payable payroll and fringe benefits.

26(ii) Eliminate deficits and deficit funds.

27(iii) Restore to special fund accounts money from
28those accounts that was used for purposes other than
29those specifically authorized.

30(iv) Balance the budget, avoid future deficits in

1funds and maintain current payments of payroll, [fringe]
2benefits and accounts through possible revenue
3enhancement recommendations, including tax or fee
4changes.

5(v) Avoid a fiscal emergency condition in the
6future.

7(vi) Enhance the ability of the municipality to
8negotiate new general obligation bonds, lease rental
9debt, funded debt and tax and revenue anticipation
10borrowing.

11(vii) Consider changes in accounting and automation
12procedures for the financial benefit of the municipality.

13(viii) Propose a reduction of debt due on specific
14claims by an amortized or lump-sum payment considered to
15be the most reasonable disposition of each claim possible
16for the municipality considering the totality of
17circumstances.

18(3) Possible changes in collective bargaining agreements
19and permanent and temporary staffing level changes or changes
20in organization.

21(4) Recommended changes in municipal ordinances or
22rules.

23(5) Recommendations for special audits or further
24studies.

25(6) An analysis of whether conditions set forth in
26section 261 exist, whether specific exclusive Federal
27remedies could help relieve the municipality's financial
28distress and whether filing a Federal debt adjustment action
29under Subchapter D is deemed to be appropriate.

30[(7) An analysis of whether the economic conditions of

1the municipality are so severe that it is reasonable to
2conclude that the municipality is no longer viable and should
3consolidate or merge with an adjacent municipality or
4municipalities.]

5(7.1) An analysis of whether the economic conditions
6within the municipality are so severe that it is no longer
7viable and should consolidate or merge with an adjacent
8municipality or municipalities in accordance with 53 Pa.C.S.
9Ch. 7 (relating to alteration of territory or corporate
10entity and dissolution) or disincorporate in accordance with
11Chapter 4.

12(8) An analysis of whether functional consolidation of
13or privatization of existing municipal services is
14appropriate and feasible and recommendations for where and
15how this could be done.

16(9) A capital budget which addresses infrastructure
17deficiencies.

18(10) Recommendations for greater use of Commonwealth
19economic and community development programs.

20(10.1) Recommendations for enhanced cooperation and
21changes in land use planning and zoning, including regional
22approaches that would promote economic development and
23improve residential, commercial and industrial use
24availability within and around the municipality.

25(11) Notwithstanding any other provision of law, limits
26on projected expenditures for individual collective
27bargaining units that may not be exceeded by the distressed
28municipality, giving due consideration to the projection of
29revenue and expenses under paragraph (1).

30(12) An analysis of current revenue sources and

1recommendation to modify revenue sources, including the
2subjects and rates of taxation of the distressed municipality
3in accordance with section 123. Recommendations relating to a
4modification of revenue sources shall be made with
5consideration to the effect on economic development,
6employment and an equitable distribution of tax burden. The
7analysis and recommendations shall be presented to the court
8in any proceeding under section 123. The analysis shall
9address:

10(i) The tax bases of current and recommended revenue
11sources from both within and outside of the distressed
12municipality.

13(ii) Collection rates, methods and costs of existing
14and, to the extent possible, proposed revenue sources<-,
15including code enforcement and tax collection.

16(iii) The current fee, charge, penalty and fine
17provisions of municipal enactments related to municipal
18services and police powers.

19(iv) Revenue as defined in section 103.

20Section 12. Section 242(a) of the act, amended December 19,
211988 (P.L.1272, No.157), is amended and the section is amended
22by adding a subsection to read:

23Section 242. Publication.

24(a) Filing.--Within [90] 120 days of an executed contract
25between the department and the coordinator, the coordinator
26shall formulate a plan for relieving the municipality's
27financial distress and shall deliver true and correct copies of
28it to:

29(1) The municipal clerk or municipal secretary, who
30shall immediately place the copy on file for public

1inspection in the municipal office.

2(2) The secretary.

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

4(4) The mayor.

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

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

7(7) All parties who have petitioned the secretary under
8section 203.

9* * *

10(c.1) Solicitation of comments.--The coordinator shall, no
11later than the date of filing, solicit comments on the
12coordinator's plan to be presented at the public meeting from
13such persons and entities which submitted timely comments under
14section 221(d)(2).

15* * *

16Section 13. Section 245 of the act, amended December 19,
171988 (P.L.1272, No.157), is amended to read:

18Section 245. Adoption by municipality.

19Not later than 25 days following the coordinator's public
20meeting, the municipal governing body shall either enact an
21ordinance approving the implementation of the plan, including
22enactment of necessary related ordinances and revisions to
23ordinances, or shall reject the plan and proceed under section
24246. If the ordinance takes effect in a municipality operating
25under an optional plan form of government or a home rule
26charter, the chief executive officer [may] shall issue an order
27directing the implementation of the plan no later than seven
28days from the enactment of the ordinance by the governing body.

29Section 14. Section 246(d)(3) of the act is amended to read:

30Section 246. Preparation and action on alternate plan.

1* * *

2(d) Review by secretary.--

3* * *

4(3) If the secretary is of the opinion that the plan,
5when implemented, will not overcome the municipality's
6financial problems, the secretary shall inform the
7municipality of the following:

8(i) The secretary's determination.

9(ii) The reasons for the determination.

10(iii) The applicability of sections 251 and 264 to
11the municipality.

12(iv) The applicability of Chapters 6 and 7 to the
13municipality.

14Section 15. Section 247(a)(4) of the act, amended June 30,
151992 (P.L.336, No.69), is amended to read:

16Section 247. Plan implementation.

17(a) Coordinator's plan.--If the coordinator's plan is
18adopted by the municipal governing body, the coordinator shall
19be charged with implementing his plan and shall:

20* * *

21(4) Terminate the plan upon its completion in accordance 
22with Subchapter C.1.

23* * *

24Section 16. The act is amended by adding a section to read:

25Section 247.1. Annual budget.

26(a) Proposed budget.--Notwithstanding any provision of law
27or home rule charter to the contrary, a municipality subject to
28a plan under this chapter shall, at least <-150 120 days prior to
29the end of its current fiscal year, commence development of a
30proposed annual budget for the next fiscal year that implements

1the provisions of the plan or makes other changes to the
2management of the municipality necessary to implement the
3provisions of the plan. The proposed budget shall be prepared by
4the governing body or the chief executive officer, as the case
5may be.

6(b) Coordinator review.--At least <-90 75 days prior to the
7end of the fiscal year, the governing body or chief executive
8officer shall submit the proposed budget to the coordinator. The
9coordinator shall review the proposed budget to verify that the
10proposed budget conforms with the plan. The coordinator shall
11make any modifications necessary to the proposed budget to meet
12the objectives of the plan.

13(c) Return of proposed budget.--After completion of the
14coordinator's review, the coordinator shall, at least 45 days
15before the end of the municipality's fiscal year, submit the
16proposed budget, together with the coordinator's modifications,
17if any, to the municipality for adoption in accordance with law.

18(d) Notification to secretary.--Within 30 days of the
19municipality's adoption of the budget, or the municipality's
20failure to timely adopt a budget, the coordinator shall notify
21the secretary whether or not the adopted budget, if any,
22conforms to the plan. Upon a determination that the budget does
23not conform to the plan, or that the municipality has not timely
24adopted a budget, the secretary may take action as provided for
25by this act.

26Section 17. Sections 248 and 250 of the act are amended to
27read:

28Section 248. Failure to adopt or implement plan.

29If no plan is adopted or implemented pursuant to this
30chapter, then sections 251 and 264 shall apply[.] and, upon a
 

1written recommendation of the coordinator, the secretary may 
2request a determination of a fiscal emergency in accordance with 
3Chapter 6.

4Section 250. Debt provisions.

5Adoption of a plan in accordance with this subchapter and 
6Subchapter C.1 by ordinance is a condition precedent for the
7approval of long-term debt or funding debt under [the act of
8July 12, 1972 (P.L.781, No.185), known as the Local Government
9Unit Debt Act] 53 Pa.C.S. Pt. VII Subpt. B (relating to 
10indebtedness and borrowing). A debt financing provision of the
11plan may be waived by agreement of the lender and the
12municipality; but any such waiving must be expressly set forth
13in the indenture or contract securing the debt.

14Section 18. Section 253 of the act is repealed:

15[Section 253. Termination of status.

16(a) Determination by secretary.--Following a duly advertised
17public hearing with notices given as provided in section 203,
18the secretary may issue a determination that the conditions
19which led to the earlier determination of municipal financial
20distress are no longer present. The determination shall rescind
21the status of municipal financial distress and shall include a
22statement of facts as part of the final order.

23(b) Determination upon petition by a municipality.--A
24financially distressed municipality may petition the secretary
25to make a determination that the conditions which led to the
26earlier determination of municipal financial distress are no
27longer present. Upon receiving the petition, the secretary may
28issue a determination to rescind following a duly advertised
29public hearing with notices given as provided in section 203.

30(c) Factors to consider.--In determining whether the

1conditions which led to the earlier determination of municipal
2financial distress are no longer present, the secretary shall
3consider that:

4(1) Monthly reports submitted by the coordinator to the
5department under section 247(a)(3) indicate that termination
6of the status of municipal financial distress is appropriate.

7(2) Accrued deficits in the municipality have been
8eliminated.

9(3) Obligations issued to finance all or part of the
10municipality's deficit have been retired.

11(4) The municipality has operated, for a period of at
12least one year, under a positive current operating fund
13balance or equity, as evidenced by the municipality's audited
14financial statements prepared in accordance with generally
15accepted accounting principles.]

16Section 19. The act is amended by adding a subchapter to
17read:

18SUBCHAPTER C.1

19DURATION OF DISTRESSED STATUS

20Section 254. Limitation of status.

21(a) Termination date.--

22(1) Except as otherwise provided in this subchapter, no
23municipality shall be subject to the provisions of this act
24after five years from the effective date of an ordinance
25enacted in accordance with section 245 or 246. No amendment
26to a plan shall affect the termination date as determined
27from the date of enactment of the original ordinance.

28(2) Nothing in this section shall be construed to:

29(i) prohibit a municipality from participating in an
30early intervention program as provided in Chapter 1-A or

1reentering distressed status in accordance with this act
2after a termination of status in accordance with this
3subchapter.

4(ii) Prohibit termination of status proceedings in
5accordance with section 255.1 prior to the termination
6date as provided in this section.

7(b) Distressed municipalities.--

8(1) Municipalities operating pursuant to a recovery plan
9on the effective date of this section shall be subject to a
10termination date five years from the effective date of the
11most recent recovery plan or amendment enacted in accordance
12with this act, provided, however, that municipalities subject
13to a plan that will remain in effect for one year or less on
14the effective date of this subsection shall be subject to a
15termination date three years from the termination date of the
16current plan or plan amendment.

17(2) If its distressed status has not been rescinded or
18has been continued in accordance with section 710.1, a
19municipality operating under Chapter 7 shall be subject to a
20final termination date no more than five years from the
21termination date of receivership. Section 255 shall not apply
22to a termination of status under this paragraph.

23Section 255. Coordinator's report.

24(a) General rule.--Not later than 180 days after the
25beginning of the final year of distressed status as determined
26in accordance with section 254(a) and (b)(1), the coordinator
27shall <-prepare complete a report stating the financial condition
28of the municipality and include one of the following findings:

29(1) Conditions within the municipality warrant a
30termination in status in accordance with section 255.1. A

1report containing a recommendation under this paragraph shall
2address each of the factors set forth in section 255.1(c).

3(2) Conditions are such that the municipality should be
4disincorporated in accordance with Chapter 4.

5(3) Conditions are such that the secretary should
6request a determination of a fiscal emergency in accordance
7with Chapter 6.

8(4) A three-year exit plan in accordance with section
9256 is warranted.

10(b) Filing and notice.--

11(1) The report shall be filed with the same parties as
12provided in section 242(a). The date of filing shall be the
13date on which the municipal clerk or municipal secretary
14places a true and correct copy of the report on file for
15public inspection in the municipal office.

16(2) On the date of filing, notice that the report has
17been filed and is open for public inspection in the municipal
18office shall be published by the coordinator in the county
19legal reporter and in one or more newspapers with general
20circulation serving the area in which the municipality is
21located. The department shall pay for the cost of the
22publication of the notice. The notice shall contain the
23following information:

24(i) A statement that a report regarding the status
25of the municipality's financial distress was filed
26pursuant to this act.

27(ii) The date and place of filing.

28(iii) A statement that the public has 15 days from
29the date of filing in which to file written comments on
30the report.

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

3(v) A summary of the report and findings of the
4coordinator.

5(vi) The date and place of a public meeting to
6receive comments on the report.

7(c) Written comments.--Written comments on the report may be
8filed with the coordinator. Written comments shall be made no
9later than 15 days after the date of filing. Written comments
10judged by the coordinator to have value to the plan may be used
11to develop a revised report.

12(d) Public meeting.--A meeting conducted by the coordinator
13in the municipality shall be set for a date not later than 20
14days after the date of filing the report. The coordinator shall
15request in writing that the chief executive officer, each member
16of the municipal governing body and the chief financial officer
17of the municipality be present at the coordinator's meeting.
18Comments on the plan shall be received by the coordinator at
19that time. The coordinator has the discretion whether to
20consider comments made on the report.

21(e) Revision of report.--

22(1) Nothing in this section shall be construed to
23preclude the coordinator from revising a report of his own
24initiative.

25(2) Neither the secretary nor the chief executive
26officer or the governing body, as appropriate, may revise the
27coordinator's report.

28(3) If the coordinator decides to revise the report, the
29coordinator shall consult with the secretary and either the
30chief executive officer or the governing body throughout the

1revision of the report and shall give consideration to
2comments they may propose.

3(4) A revised report shall be completed and delivered to
4each party cited in section 242(a) within ten days from the
5date of the coordinator's public meeting on the original
6report.

7Section 255.1. Termination of status.

8(a) Public hearing.--Within 30 days of the date for the
9filing of a final report containing a finding as provided in
10section 255(a)(1) the secretary shall conduct a public hearing,
11advertised with notices given as provided in section 203.

12(b) Determination.--Within 90 days of the conclusion of the
13public hearing, the secretary shall issue an administrative
14determination of whether the termination of status is
15appropriate and reasons for the determination. The determination
16shall include findings addressing each of the factors in
17subsection (c) and shall consider information provided in the
18report of the coordinator and any additional information
19received during the public hearing.

20(c) Factors to consider.--If the secretary concludes that
21substantial evidence supports an affirmative determination for
22each of the following factors, the determination shall be that
23distressed status will be rescinded. The secretary shall
24consider whether:

25(1) Operational deficits of the municipality have been
26eliminated and the financial condition of the municipality,
27as evidenced by audited financial statements prepared in
28accordance with generally accepted accounting principles and
29projections of future revenues and expenditures, demonstrates
30a reasonable probability of future balanced budgets absent

1participation in this act.

2(2) Obligations issued to finance the municipality's
3debt have been retired, reduced or reissued in a manner that
4has adequately refinanced outstanding principle and interest
5and has permitted timely debt service and reasonable
6probability of continued timely debt service absent
7participation in this act.

8(3) The municipality has negotiated and resolved all
9claims or judgments that would have placed the municipality
10in imminent jeopardy of financial default.

11(4) The reasonably projected revenues of the
12municipality are sufficient to fund ongoing necessary
13expenditures, including pension <-and debt obligations and the
14continuation or negotiation of collective bargaining
15agreements and the provision of municipal services.
16Projections of revenues shall include any anticipated tax or
17fee increases to fund ongoing expenditures for the first five
18years after a termination of distressed status.

19(d) Appeal.--<-A labor organization that is a party to a
20collective bargaining agreement with a financially distressed
21municipality and any other party withstanding under section 202
22may appeal the The determination of the secretary <-may be
23appealed pursuant to 2 Pa.C.S. Ch. 7 Subch. A (relating to
24judicial review of Commonwealth agency action)<-. by any of the
25following:

26(1) The governing body of the municipality.

27(2) A creditor of the municipality.

28(3) Ten percent of the number of electors of the
29municipality that voted at the last municipal election.

30(4) Ten percent of the beneficiaries of a pension fund

1of the municipality.

2(5) Ten percent of the employees of the municipality.

3(6) Trustees or paying agents of a municipal bond
4indenture.

5(7) Elected auditors, elected controllers or appointed
6independent auditors.

7(8) A trustee of the Municipal Pension Fund.

8(9) The chief executive officer of any city.

9(10) A labor organization that is a party to a
10collective bargaining agreement with the municipality.

11(e) Suspension of subsequent proceedings.--The coordinator
12and secretary shall not take any action under sections 256 and
13257 until a final decision is issued for any appeal under
14subsection (d) or (f). The duration of distressed status of the
15municipality shall be extended subject to subsequent action in
16accordance with section 257.

17(f) Action of the secretary preserved.--Except as otherwise
18provided in chapters 6 and 7, the secretary may, following a
19duly advertised public hearing with notices given as provided in
20section 203, at any time issue a determination as provided in
21this section upon written recommendation of the coordinator
22setting forth a discussion of each of the factors specified in
23subsection (c). The determination may be appealed in accordance
24with subsection (d).

25Section 256. Exit plan.

26(a) General rule.--If recommended in a final report under
27section 255, the coordinator shall within 90 days of the public
28meeting referred to in section 255 <-or the filing of the final 
29report under section 255(e)(4), whichever is later, prepare an
30exit plan for the municipality. The exit plan shall be subject

1to the same filing, notice, public meeting and revision
2procedures as specified in section 255.

3(b) Contents of exit plan.--The exit plan prepared by the
4coordinator shall contain such elements as may be necessary to
5ensure termination of distressed status after three years,
6including, but not limited to:

7(1) The sale, lease, conveyance, assignment or other use
8or disposition of the assets of the distressed municipality.

9(2) Functional consolidation of or privatization of
10existing municipal services.

11(3) The execution, approval, modification, rejection,
12renegotiation or termination of contracts or agreements of
13the distressed municipality, provided, however, that the
14provisions of section 252 shall apply to any exit plan
15adopted in accordance with this subchapter.

16(4) Changes in the form of municipal government or the
17configuration of elected or appointed municipal officials and
18employees as permitted by law.

19(c) Adoption of plan.--

20(1) Not later than 45 days following the coordinator's
21public meeting <-to hear comments on the exit plan, the
22municipal governing body shall enact an ordinance approving
23the implementation of the plan, including enactment of
24necessary related ordinances and revisions to ordinances.

25(2) If the ordinance takes effect in a municipality
26operating under an optional plan form of government or a home
27rule charter, the chief executive officer shall issue an
28order directing the implementation of the plan no later than
29seven days from the enactment of the ordinance by the
30governing body.

1(3) If the governing body fails to adopt and implement
2the plan, the secretary shall, upon a written determination
3by the coordinator, request that the Governor make a
4determination of a fiscal emergency in accordance with
5Chapter 6.

6(4) The requirements of this subsection shall be
7suspended if the coordinator first provides a recommendation
8to the secretary that the municipality should be
9disincorporated under Chapter 4.

10Section 257. Postreport procedures.

11(a) Five-year procedures.--The secretary shall, upon written
12recommendation from the coordinator and after filing a final
13report under section 255, take one of the following actions:

14(1) Terminate the distressed status of the municipality
15effective 90 days after a determination or final decision
16requiring termination of status as provided in section 255.1.

17(2) After filing a final report containing a
18recommendation under section 255(a)(2), terminate the
19distressed status of the municipality effective on the date
20of a final order establishing an unincorporated district
21under Chapter 4.

22(3) After filing a final report containing a
23recommendation under section 255(a)(3), request a
24determination of a fiscal emergency in accordance with
25Chapter 6.

26(b) Exit plan procedures.--The secretary may, after the
27adoption of a plan under section 256(c) and upon written
28recommendation of the coordinator:

29(1) issue a determination in accordance with section
30255.1; or

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

3(c) Postexit plan procedures.--If three years have elapsed
4since the adoption of an exit plan without a recommendation as
5provided in subsection (b), the secretary shall terminate the
6distressed status of the municipality.

7Section 20. Section 261(a)(4) of the act, amended July 5, 
82012 (P.L.1104, No.133), is amended and the section is amended 
9by adding a subsection to read:

10Section 261. Filing municipal debt adjustment under Federal
11law.

12(a) [Authorization.--In the event one of the following
13conditions is present, a] General authorization.--A municipality
14is hereby authorized to apply to the department to file a
15municipal debt adjustment action pursuant to the Bankruptcy Code
16(11 U.S.C. § 101 et seq.), if at least one of the following 
17conditions is present:

18* * *

19[(4) A majority of the current or immediately preceding
20governing body of a municipality determined to be financially
21distressed has failed to adopt a plan or to carry out the
22recommendations of the coordinator pursuant to this act.]

23(a.1) Filing after determination of distress.--The
24municipality's authorization under subsection (a) shall continue
25after the issuance of a declaration of distress under section
26203, so long as the municipality is not in a state of fiscal
27emergency pursuant to a declaration under section 602. A
28municipality that is in a state of fiscal emergency shall not be
29authorized under subsection (a) to apply to the department to
30file a municipal debt adjustment.

1* * *

2Section 21. Section 281 of the act, added June 30, 1992
3(P.L.336, No.69), is amended to read:

4Section 281. Eligibility.

5If a municipality has been determined to be distressed under
6section 203(f) and is not subject to funding restrictions under
7section 251 or 264, it shall be eligible for economic and
8community development assistance as provided in section 282.
9Merger or consolidation [under Chapter 4] of a distressed
10municipality with a municipality may not be deemed to diminish
11the successor municipality's eligibility or priority status for
12economic assistance under this chapter.

13Section 22. Section 282(b) of the act, added June 30, 1992
14(P.L.336, No.69), is amended and the section is amended by
15adding a subsection to read:

16Section 282. Priority.

17* * *

18(b) Releases of funds.--Funds granted to a distressed
19municipality shall only be released upon concurrence by the
20coordinator or receiver that the program to be funded is
21consistent with efforts to alleviate the financially distressed
22status of the municipality as provided in this act.

23(b.1) Release of funds to unincorporated district.--Funds
24granted to an unincorporated district shall be released to the
25administrator in accordance with section 441.

26* * *

27Section 23. Chapter 4 heading of the act is amended to read:

28CHAPTER 4

29[CONSOLIDATION OR MERGER OF] ECONOMICALLY NONVIABLE

30MUNICIPALITIES

1Section 24. Chapter 4 of the act is amended by adding
2subchapters to read:

3SUBCHAPTER C

4DISINCORPORATION OF NONVIABLE MUNICIPALITIES

5Section 431. Definitions

6The following words and phrases when used in this subchapter
7shall have the meanings given to them in this section unless the
8context clearly indicates otherwise:

9"Administrator." A service district administrator appointed
10pursuant to section 434.

11"District." An unincorporated service district created by
12section 441.

13"District advisory committee." A service district advisory
14committee established by section 442.

15"Governing standards." Provisions within an essential
16services plan providing for certain conduct of residents and
17property owners as provided by section 436(c).

18"Municipality." A county, city, borough, incorporated town,
19township or home rule municipality that does not provide police
20service or fire service through its employees. The term does not
21include a city of the first class.

22"Restricted Account." An account established in the State
23Treasury as provided by section 445.1.

24Section 431.1. Determination of nonviability.

25(a) General rule.--Upon recommendation of a coordinator
26appointed under Chapter 2 or a receiver appointed under Chapter
277, the secretary shall consider whether all of the following
28conditions have been met in determining that a municipality is
29nonviable:

30(1) The municipality is unable to function as a general

1purpose unit of government to provide essential services to
2its residents and property owners.

3(2) The municipality has experienced such deteriorated
4economic conditions and a collapse of its tax base that all
5reasonable efforts to restore economic viability have failed.

6(3) Efforts to merge or consolidate the municipality
7with a neighboring municipality are unachievable or will not
8result in viability.

9(b) Notice and recommendation.--If the secretary determines
10that a municipality is nonviable under all of the conditions
11provided in subsection (a), the secretary shall provide notice
12to the governing body of the municipality of the secretary's
13determination and recommend that the municipality be
14disincorporated under this subchapter.

15Section 432. Procedure for disincorporation.

16(a) Ordinance.--Within 45 days of a determination of
17nonviability under section 431.1, the governing body may enact
18an ordinance, subject to review by the court of common pleas
19under section 433, that will initiate the disincorporation of
20the municipality. The ordinance shall be advertised as required
21by law but it may not become effective until the court has
22issued its decree under section 433.

23(b) Petition by electors.--If the governing body of the
24municipality fails to pass an ordinance authorized under
25subsection (a), then a petition signed by registered electors of
26the municipality comprising at least 51% of the number of
27electors voting for the office of Governor in the last
28gubernatorial general election may be submitted to the court
29within 60 days of the failure of the governing body to enact an
30ordinance as provided in subsection (a).

1Section 433. Judicial review of ordinance or petition.

2(a) Filing and notice.--Upon presentation to the court of
3the filing of an ordinance under section 432(a) or a petition
4under section 432(b), the court shall direct the prothonotary to
5give notice of the filing of the ordinance or petition in a
6newspaper of general circulation in the county where the
7municipality is located once a week for four consecutive weeks
8and once in the county legal journal, if any, during the four-
9week period. The notice shall provide the date the ordinance or
10petition was filed and specify that exceptions to the ordinance
11or petition may be filed within 45 days of the date of the
12filing of the ordinance or petition by any of the following:

13(1) the governing body of the municipality;

14(2) a taxpayer of the municipality;

15(3) any creditor or bondholder of the municipality; or

16(4) any collective bargaining unit or contractor of the
17municipality.

18(b) Notice of hearing.--No later than 60 days after the date
19of the filing of the ordinance or petition, the court shall
20conduct a hearing on the ordinance or petition and exceptions
21filed thereto. Notice of the hearing shall be provided by the
22court to those receiving notice under subsection (a) and to all
23other parties that have filed exceptions in accordance with
24subsection (a).

25(c) Hearing proceedings.--

26(1) The governing body of the municipality and all other
27individuals and entities which have filed exceptions under
28subsection (a) shall be parties to the proceedings and shall
29be entitled to present testimony or other evidence relevant
30to the nonviability of the municipality or relevant to

1exceptions timely filed, provided that the court, in its
2discretion, may consolidate testimony related to similar
3exceptions.

4(2) The coordinator or receiver, or another designee of
5the secretary, shall testify about the progress of the
6municipality under the adopted recovery plan under Chapter 2
7or plan adopted under Chapter 7 and render an opinion
8regarding the viability of the municipality.

9(3) The court may examine pertinent financial
10information and any audits prepared by a certified public
11accountant of the municipality and receive additional
12evidence relevant to the matter, including, but not limited
13to, evidence relating to:

14(i) The effect of disincorporation, including
15provisions for services that would be continued to be
16provided to residents and property owners of the proposed
17disincorporated area.

18(ii) Additional plans, proceedings or strategies
19that could ensure that the municipality remain viable.

20(iii) The effect of the disincorporation on any
21bonds, other obligations or agreements of the
22municipality.

23(d) Costs and fees.--Court costs and filing fees associated
24with proceedings under this subchapter shall be paid by the
25department.

26(e) Judicial decree.--

27(1) The court shall issue a decree approving the
28validity of the ordinance or granting the petition unless it
29finds, by clear and convincing evidence, that the
30municipality should continue to exist as a separate municipal

1corporation because of a reasonable expectation that the
2municipality is viable.

3(2) Upon issuance of the judicial decree, the department
4and governing body of the municipality shall engage in the
5duties required by this subchapter to prepare for
6disincorporation. The disincorporation shall take effect upon
7the execution of disincorporation under section 439.

8Section 433.1. Failure to initiate disincorporation.

9(a) Conditions prior to determination.--The secretary shall
10issue a determination under subsection (b) within 30 days of
11either:

12(1) the final day for filing a petition under section
13432(b), if judicial review under section 433 has not been
14initiated; or

15(2) a final adjudication pursuant to a hearing held
16under section 433 finding that the municipality should
17continue to exist as a separate municipal corporation because
18of a reasonable expectation that the municipality is viable.

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

20(1) the recovery plan for the municipality shall remain
21in effect subject to the limitations of chapter 2, subchapter
22C.1 and, if the coordinator has previously issued a report
23pursuant to section 255, the secretary shall direct the
24coordinator to prepare an exit plan according to section 256;

25(2) the elected and appointed officials of the
26municipality have demonstrated a failure to adequately
27implement recovery measures and, if so, request a
28determination of a fiscal emergency in accordance with
29Chapter 6;

30(3) conditions within the municipality warrant a

1termination in status in accordance with section 255.1; or

2(4) conditions as set forth in section 261 exist and, if
3so, that the governing body should initiate proceedings for
4federal debt readjustment under Subchapter D of Chapter 2.

5Section 434. Service district administrator.

6(a) Appointment.--No later than 30 days following a decree
7of the court of common pleas under section 433(e), the secretary
8shall appoint a service district administrator. The
9administrator must have a minimum of five years' experience and
10demonstrable expertise in business, financial or State or local
11budgetary matters and be a resident of this Commonwealth for at
12least one year prior to appointment.

13(b) Compensation and expenses.--The administrator's
14compensation and reimbursement for actual and necessary expenses
15shall be paid by the Commonwealth. The date and amount of
16compensation shall be established by the secretary. The
17department may require the compensation and expenses of the
18administrator to be reimbursed by an assessment for
19administrative costs under Subchapter D.

20(c) Revocation and vacancy.--The secretary may the elected
21and appointed officials of the revoke the appointment of an
22administrator at any time. A vacancy in the office of the
23administrator by way of revocation or resignation shall be
24filled in the same manner as the original appointment.

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

26(1) Seek or hold a position as any other elected or
27appointed public official within this Commonwealth or as a
28political party officer during the term of the
29administrator's tenure.

30(2) Seek election as a public official or political

1party officer for one year after the person's service as
2administrator has ended.

3(3) Engage in any conduct prohibited by the act of July
419, 1957 (P.L.1017, No.451), known as the State Adverse
5Interest Act, or 65 Pa.C.S. Ch. 11 (relating to ethics
6standards and financial disclosure).

7(e) Liability.--

8(1) The administrator shall not be liable personally for
9any obligations of the municipality or unincorporated service
10district.

11(2) It is declared to be the intent of the General
12Assembly that the administrator shall enjoy sovereign and
13official immunity as provided in 1 Pa.C.S. § 2310 (relating
14to sovereign immunity reaffirmed; specific waiver) and shall
15remain immune from suit except as provided by and subject to
16the provisions of 42 Pa.C.S. Ch. 85 Subchs. A (relating to
17general provisions) and B (relating to actions against
18Commonwealth parties).

19(f) Powers and duties.--Notwithstanding any other provision
20of law, the administrator shall have the following powers and
21duties:

22(1) To require the municipality to take actions
23necessary for disincorporation under section 439, including:

24(i) The sale, conveyance, assignment or other use or
25disposition of the municipality's assets as provided by
26law.

27(ii) The repayment of debt, bonds or other
28obligations before disincorporation.

29(iii) Any other action necessary to implement the
30disincorporation.

1(2) To seek a writ of mandamus against the governing
2body to carry out this subchapter.

3(3) To identify essential services which should be
4provided to the residents and property owners of the district
5after the municipality is disincorporated.

6(4) To approve, disapprove, modify, reject, terminate or
7renegotiate contracts and agreements to provide services to
8the residents and property owners of the district.

9(5) To deposit all funds collected to administer
10Subchapter D in the municipality's restricted account and to
11requisition moneys from the restricted account.

12(6) To apply for grants, loans or payments under any
13economic and community development program funded by the
14Commonwealth.

15(7) To establish fees which may be assessed to fund
16essential services provided by contract or intergovernmental
17cooperation agreements under Subchapter D.

18(8) To meet and consult with the municipal governing
19body before disincorporation and the district advisory
20committee after the establishment of the district.

21(9) To meet and consult with county officials to
22prevent, abate and mediate blight as permissible by law.

23(10) To contract for professional services to aid in the
24administrator's duties under this subchapter and Subchapter
25D.

26(11) To seek enforcement of any provision of this
27subchapter and Subchapter D.

28(12) To seek invalidation of any act by the governing
29body of the municipality in conflict with the administrator's
30essential services plan.

1Section 435. Powers and duties of municipality.

2(a) General rule.--After the review of the court of common
3pleas resulting in a decree under section 433(e), but not less
4than 30 days before the date set by the administrator for
5disincorporation to take effect, the governing body of the
6municipality shall:

7(1) Enact a budget in the municipality's projected final
8year that funds the municipality's functions until the date
9of disincorporation and provides for the payment of every
10current obligation of the municipality before the date of
11disincorporation. All remaining municipal funds as of the
12date of disincorporation shall be transferred to the
13municipality's restricted account.

14(2) Provide for the transfer and administration of any
15municipal pension obligation to a private or public pension
16fund. Nothing in this paragraph shall be construed to
17authorize a modification of the pension benefits due to any
18current or past employee of the municipality.

19(3) Provide for the appointment of the district advisory
20committee to assist the administrator after the
21disincorporation of the municipality.

22(b) Corporate powers reserved.--After the review of the
23court of common pleas resulting in a decree under section 433(e)
24until the date of disincorporation, the governing body shall
25retain all corporate powers otherwise authorized by law, except
26that it shall not take any action inconsistent with the
27administrator's plan for disincorporation.

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

29(1) The governing body of the municipality may adopt
30recommended governing standards which may be included by the

1administrator in the essential services plan as the governing
2standards of the district.

3(2) If the governing body adopts recommended governing
4standards, the following shall apply:

5(i) No later than 30 days following a decree of the
6court of common pleas under section 433(e), the governing
7body shall provide written notice to the administrator
8that the governing body intends to adopt an ordinance
9containing recommended governing standards for the
10inclusion in the essential services plan.

11(ii) No later than 60 days following the notice
12provided under subparagraph (i), the governing body shall
13adopt an ordinance containing recommended governing
14standards for inclusion in the essential services plan.
15The ordinance may incorporate, by reference, any
16previously enacted ordinance of the municipality.

17(d) Powers of district advisory committee authorized.--After
18the review of the court of common pleas resulting in a decree
19under section 433(e) but prior to the date of disincorporation,
20in addition to the powers provided for under this subchapter,
21the governing body of the municipality may advise the
22administrator in the manner provided for the district advisory
23committee under Subchapter D in the formation and amendment of
24the essential services plan.

25Section 436. Essential services plan.

26(a) Formation.--The administrator shall, within 90 days
27following appointment and in consultation with the department,
28develop an essential services plan to provide essential services
29after the date of disincorporation. The essential services plan
30shall provide for:

1(1) Negotiation of contracts for the provision of vital
2and necessary services, not otherwise provided by an
3authority, as defined under Chapters 6 and 7. If the
4municipality participates in a regional police or fire
5department through an intergovernmental cooperation
6agreement, the essential services plan may provide for
7continued service from that regional department by contract
8or by renegotiating the intergovernmental cooperation
9agreement.

10(2) Local emergency management in accordance with the
11plan and program of the Pennsylvania Emergency Management
12Agency. The administrator shall consult with the emergency
13management organization of the county where the district is
14located to develop a plan which serves the district in a
15substantially similar manner as plans required for a
16political subdivision under 35 Pa.C.S. Ch. 75 Subch. A
17(relating to general provisions). The plan shall include a
18procedure for a declaration of a disaster emergency to be
19made in the district and the designation of a local
20coordinator of emergency management. The administrator is
21authorized to negotiate any contracts which are necessary to
22provide for the execution of a plan formed under this
23paragraph.

24(3) Payment of the lawful financial obligations of the
25unincorporated service district, including any transferred
26current obligation of the municipality and service of any
27debt incurred by the municipality in the manner provided by
28Subchapter D, after the disincorporation of the municipality.

29(4) Assessment of fees as provided by Subchapter D.

30(5) Disposition of all municipal property by sale, lease

1or conveyance for any of the following purposes:

2(i) Payment of outstanding debt obligations.

3(ii) Provision of services by an entity contracting
4with the unincorporated service district.

5(iii) Possession of title by the Commonwealth as
6provided by Subchapter D.

7(6) Termination of all contracts with the municipality.

8(7) Administration of the unincorporated service
9district, which may include reimbursement to the department
10for the compensation of the administrator.

11(8) Establishment of the date of disincorporation of the
12municipality as provided for by section 439.

13(9) Establishment of the name of the district. A
14district established by this act shall be named "The
15Unincorporated District of ........................."

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

17(1) Provide for the levy of any taxes.

18(2) Terminate an obligation to repay any debt, except
19that the plan may designate the unincorporated service
20district as the servicer of a debt and may specify that a
21debt secured by the collection of taxes shall be secured by
22the assessment of fees sufficient to satisfy the service
23obligations of the debt.

24(3) Assess and collect a higher amount of fees in the
25district's first full calendar year totaling 5% more than the
26total taxes levied in the municipality's final year before
27disincorporation.

28(4) Authorize the incurrence of any debt by the
29district, except as provided under section 441(k).

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

1(1) The essential services plan shall provide for
2governing standards, which standards shall include:

3(i) Rules and conduct related to the maintenance of
4property, conduct in public places and the parking of
5vehicles in public places which shall protect the health,
6safety and welfare of the residents and property owners
7of the district to the extent such rules and conduct
8could have been adopted by the municipality by ordinance.

9(ii) Fines and other relief which may be granted by
10a court presiding over a civil action brought for a
11violation of the governing standards.

12(2) If the governing body of the municipality adopts
13recommended governing standards as provided in section
14435(c), the administrator shall include the recommended
15governing standards in the essential services plan unless the
16administrator finds that the recommended governing standards
17are unlawful, unconstitutional or would substantially impede
18the administration of the essential services plan.

19Section 437. Proposed essential services plan.

20(a) Filing.--Within 90 days of the appointment of the
21administrator, the administrator shall deliver true and correct
22copies of the proposed essential services plan to:

23(1) The municipal clerk or municipal secretary, who
24shall immediately place the copy on file for public
25inspection in the municipal office.

26(2) The secretary.

27(3) Each member of the municipal governing body.

28(4) The chief executive officer of the municipality.

29(5) The chief financial officer of the municipality.

30(6) The solicitor of the municipal governing body.

1(b) Date of filing.--For purposes of this section, the date
2of filing the proposed essential services plan shall be the date
3on which the municipal clerk or municipal secretary places a
4true and correct copy of the proposed essential services plan on
5file for public inspection in the municipal office.

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

7(1) On the date of filing, notice that a proposed
8essential services plan has been filed and is open for public
9inspection in the municipal office shall be published by the
10administrator in the county legal reporter and in one or more
11newspapers with general circulation serving the area in which
12the municipality is located. The cost for publishing the
13notice shall be borne by the department. The notice shall
14contain the following:

15(i) A statement that a proposed essential services
16plan has been filed regarding the provision of essential
17services to the residents and property owners of the
18unincorporated service district which shall succeed the
19municipality after disincorporation.

20(ii) The date and place of filing.

21(iii) A statement that the public has 15 days from
22the date of filing in which to file written comments
23relating to the proposed essential services plan.

24(iv) The name and address of the administrator to
25whom written comments should be sent.

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

27(2) Notice of an administrator's public meeting on the
28proposed essential services plan shall be published by the
29administrator in the county legal reporter and in one or more
30newspapers with general circulation serving the area in which

1the municipality is located. The department shall bear the
2cost for publishing the notice. The notice shall contain the
3following:

4(i) A statement that the purpose of the
5administrator's public meeting is to receive public
6comments on the proposed essential services plan.

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

8(3) The administrator may combine the publication of the
9notice that a proposed essential services plan has been filed
10with the publication of the notice of the public meeting.

11(d) Comment period.--Written comments on the proposed
12essential services plan may be filed with the administrator.
13Written comments shall be made no later than 15 days after the
14date of filing. Written comments judged by the administrator to
15have value to the proposed essential services plan may be used
16to develop revisions for a final essential services plan.

17(e) Administrator's public meeting.--A meeting conducted by
18the administrator in the municipality shall be set for a date no
19later than 20 days after the date of filing the proposed
20essential services plan. The administrator shall request in
21writing that the chief executive officer, each member of the
22municipal governing body and the chief financial officer of the
23municipality to be present at the service administrator's
24meeting. At that meeting, the administrator shall:

25(1) Present a summary of the proposed essential services
26plan.

27(2) Receive public comment on the proposed essential
28services plan.

29(3) Allow the members of the governing body of the
30municipality to present written and oral comments requesting

1revisions of the proposed essential services plan.

2Section 438. Final essential services plan.

3(a) Amendment of plan.--

4(1) The administrator shall consider all timely
5submitted written comments, comments presented at the public
6meeting and requests for revision in the amendment of the
7publicly presented proposed essential services plan before
8publishing a final essential services plan.

9(2) In the event that the administrator does not
10incorporate the requests for revision by the members of the
11governing body of the municipality regarding the levels of
12services provided under the proposed essential services plan
13or the basis for the calculation of fees assessed under the
14proposed essential services plan, the administrator shall
15state in the proposed essential services plan why the
16requested revisions were not feasible to incorporate in the
17final essential services plan.

18(b) Notice of final essential services plan.--Within 45 days
19of the public meeting the administrator shall file the final
20essential services plan with the persons listed in section
21437(a) and provide notice of the publication of the final
22essential services plan in the manner provided in section
23437(c)(1)(i), (ii) and (v).

24(c) Appeal.--

25(1) Any person aggrieved by the final essential services
26plan may appeal the plan to the court of common pleas within
2730 days of notice of the filing of the final essential
28services plan. For purposes of this section, notice shall
29constitute the date that the person received actual notice of
30the final essential services plan, or the date that notice of

1the filing of the final essential services plan is first
2published in a newspaper with general circulation serving the
3area in which the municipality is located.

4(2) No appeal of a final essential services plan shall
5constitute an automatic stay of the essential services plan.

6(3) The appeal shall be sustained only where the court
7finds that the final essential services plan is unlawful or
8unconstitutional, or the conduct of the administrator is
9arbitrary or capricious.

10Section 439. Disincorporation of municipality.

11(a) Effects of disincorporation.--On the date of
12disincorporation, the following shall occur:

13(1) Notwithstanding any other provision of law, the
14terms of office of all elected officials of the municipality
15shall end and no person shall be elected or appointed to fill
16any vacancy of office.

17(2) All ordinances of the municipality shall be
18nullified.

19(3) All corporate powers granted to the municipality
20under its charter, municipal code or any other provision of
21law shall terminate.

22(4) The municipality shall be deemed by operation of law
23to be disincorporated. The area formerly contained within the
24municipality shall be an unincorporated service district as
25provided under Subchapter D.

26(b) Duties of administrator.--On or before the date of
27disincorporation, the administrator shall:

28(1) Execute all contracts for the provision of services
29and otherwise implement the essential services plan, which
30shall take effect on the date of disincorporation.

1(2) Provide notice of assessments to the property owners
2of the unincorporated service district according to the
3procedure provided in section 443(b) which may be a partial
4year assessment as provided by section 443(e).

5(3) Provide notice to the Governor and all Commonwealth
6agencies that the municipality has been disincorporated and
7the date of disincorporation.

8(c) Duties of county.--Effective on the date of
9disincorporation, notwithstanding any other provision of law,
10the county in which the municipality is located shall:

11(1) Adopt a zoning ordinance which applies to the
12unincorporated service district and adopts the substantive
13provisions of the municipality's zoning ordinance, if any, as
14it was in effect before nullification by subsection (a)(2).

15(2) Adopt an official map for the unincorporated service
16district which adopts the substance of the municipality's
17official map, if any, as it was in effect before
18nullification by subsection (a)(2).

19(3) Unless the county has adopted a subdivision and land
20development ordinance prior to the date of disincorporation
21of the municipality, adopt a subdivision and land development
22ordinance which shall apply to any unincorporated service
23district within the county.

24(4) Provide for the administration of the zoning
25ordinance and the subdivision and land development ordinance
26as they apply to the unincorporated service district and any
27other provisions of the act of July 31, 1968 (P.L.805,
28No.247), known as the Pennsylvania Municipalities Planning
29Code, that may be applicable.

30(5) Amend the county's comprehensive plan to the extent

1necessary to be consistent with the requirements of this
2subsection.

3(d) Property succession.--Immediately following
4disincorporation the area formerly contained within the
5municipality shall, by operation of law, be deemed an
6unincorporated service district under Subchapter D, the
7Commonwealth shall succeed in title to all property, including
8all real property, personal property and moneys in any municipal
9account, of the disincorporated municipality to be held in trust
10for the benefit of the residents and property owners of the
11unincorporated service district as provided under Subchapter D.

12SUBCHAPTER D

13UNINCORPORATED SERVICE DISTRICT

14Section 441. Establishment of unincorporated service district.

15(a) General rule.--The area formerly contained within a
16municipality shall, after disincorporation under Subchapter C,
17become an unincorporated service district. The district shall be
18an entity of the Commonwealth established for the special
19purpose of providing essential services to the citizens living
20within the district until such time as the district is
21incorporated as a municipality or made a part of a merged or
22consolidated with an existing municipality under section 447.

23(b) Authorized administrative authority.--All powers
24providing for the administration of the district shall be vested
25in the department through the administrator as provided in this
26subchapter. The district advisory committee shall not possess
27the corporate powers of the governing body of any municipality
28or any authority, except as provided by this subchapter.

29(c) Corporate powers prohibited.--Nothing in this subchapter
30shall be construed as authorizing the district to exercise

1corporate powers for the administration of a local government,
2including the power to levy taxes, establish elected or
3appointed offices and purchase, sell or convey property, except
4that the residents of the district may incorporate a
5municipality or merge or consolidate with an existing
6municipality as provided for in section 447.

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

8(1) All assets not sold by the municipality during the
9process of its disincorporation shall be conveyed to the
10Commonwealth to be held in trust for the benefit of the
11residents and property owners of the district.

12(2) The administrator shall serve as trustee of the
13property and provide for the repair and maintenance of all
14real property and roadways held in trust for the benefit of
15the residents and property owners of the district through the
16collection of assessments under this subchapter and
17administration of payments distributed to the district as
18provided in subsection (f).

19(3) Nothing in this subsection shall be construed as
20providing the express approval of the General Assembly to
21dispose of or use any lands acquired with funds under the act
22of June 22, 1964 (Sp.Sess., P.L.131, No.8), known as the
23Project 70 Land Acquisition and Borrowing Act, for purposes
24other than those provided by that act, except that the
25Commonwealth may succeed in title of the property for the
26limited purposes established by this subsection.

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

28(1) All debt incurred by the municipality before the
29establishment of the district shall be held by the district
30for administration by the administrator. Any such debt shall

1be secured by the assets conveyed to the Commonwealth and
2held in trust under subsection (d) and serviced by fees
3collected under this subchapter.

4(2) Nothing in this section shall be construed to
5authorize the Commonwealth to guarantee any debt incurred by
6a municipality or district with the full faith and credit of
7the Commonwealth, revenues from the General Fund or any other
8source of revenue not derived from fees assessed for the
9administration of this subchapter or gains from the sale of
10assets of the former municipality.

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

12(1) A district shall be eligible to receive any
13financial grant, loan or payment and participate in any
14program for which it was eligible when it was a municipality,
15including, but not limited to, <-emergency grants and loans 
16under Chapter 3, payments distributed pursuant to the act of
17June 1, 1956 (1955 P.L.1944, No.655), referred to as the
18Liquid Fuels Tax Municipal Allocation Law, all programs
19administered by the Pennsylvania Infrastructure Investment
20Authority and all economic and community development programs
21funded by the Commonwealth.

22(2) A district shall continue to receive priority in all
23economic and community development programs funded by the
24Commonwealth as provided for by Subchapter E of Chapter 2.

25(3) The administrator may apply for and shall manage any
26funds distributed to the district pursuant to this section.

27(g) Credit for fees assessed.--The payment of fees under
28this subchapter by a resident of a district shall constitute a
29credit against the collection of any income tax by a
30municipality on nonresidents, if applicable.

1(h) Relationship with existing municipal and other
2authorities preserved.--

3(1) All authorities established to provide services to
4the residents and property owners of a municipality prior to
5disincorporation shall continue to serve the residents and
6property owners of a district, and all members of the
7authority appointed by the governing body of the municipality
8prior to disincorporation shall continue to serve out the
9remainder of the members' terms.

10(2) Notwithstanding the provisions of 53 Pa.C.S. § 5607
11(relating to purposes and powers) or any other provision of
12law, subsequent appointments to the authority board which
13would otherwise be made by the governing body of the
14municipality shall be made by the administrator in
15consultation with the district advisory committee.

16(i) Governing standards enforceable.--

17(1) The governing standards included in the essential
18services plan shall be enforceable by the filing of a civil
19action by the administrator or any aggrieved property owner
20or resident of the district.

21(2) A violation of the governing standards shall
22constitute a public nuisance.

23(3) A magisterial district court or another court of
24competent jurisdiction presiding over a civil action brought
25under this subsection may find relief for the filing party
26according to the relief provided for in the essential
27services plan or any other relief which is available by law
28for the abatement of a public nuisance.

29(j) Pennsylvania Construction Code applicable.--

30(1) The act of November 10, 1999 (P.L.491, No.45), known

1as the Pennsylvania Construction Code Act, shall apply to all
2construction, alteration, repair and occupancy of all
3buildings within the district as though the district were a
4municipality which opted not to adopt the uniform
5construction code by ordinance.

6(2) The administrator shall receive any application for
7a construction permit and provide appropriate notices to an
8applicant of a construction permit and the Department of
9Labor and Industry as provided under section 501(e) of the
10Pennsylvania Construction Code Act.

11(k) Incurrence of debt limited.--The district shall not
12incur debts not provided for in subsection (e), except that the
13administrator may utilize such mechanisms as are necessary to
14incur temporary debts, or make purchases on credit, on behalf of
15and for the limited purpose of managing the cash flow for the
16district. All obligations incurred under this subsection shall
17be satisfied in full within one year and secured only by the
18anticipation of the collection of assessments under section 443.

19Section 442. Service district advisory committee.

20(a) Establishment.--Each service district shall establish a
21service district advisory committee.

22(b) Composition.--The district advisory committee shall be
23composed of three persons who are at least 18 years of age,
24including two resident property owners of the district and one
25owner of a business within the district, if any, who may or may
26not be a resident of the district.

27(c) Appointment by governing body.--At least 30 days prior
28to the date of disincorporation, the governing body of the
29former municipality shall appoint three members of the district
30advisory committee. The governing body shall designate that one

1appointee serve a term of one year, one appointee serve a term
2of two years and one appointee serve a term of three years.

3(d) Vacancy.--At the expiration of the term of a member of
4the district advisory committee, the remaining members of the
5committee shall appoint a person to fill the vacancy. In the
6event that the remaining members of the committee are unable to
7agree on a person to fill the vacancy or there is more than one
8vacancy, the administrator shall select a person or persons to
9fill the vacancy. All persons appointed to fill a vacancy on the
10district advisory committee shall have a term of three years
11beginning on the date of appointment.

12(e) Advise administrator.--The district advisory committee
13shall, at least once every three months, meet with the
14administrator and may make recommendations to the administrator
15for revisions to the essential services plan, including
16revisions to the levels of services provided to the residents
17and property owners of the district and methodology of rate
18calculation. The administrator shall consider all
19recommendations of the district advisory committee.

20(f) Advise county on land use issues.--The district advisory
21committee may provide recommendations on behalf of the residents
22and property owners of the district to any county official
23regarding any land use-related matter.

24(g) Advise department on incorporation.--The district
25advisory committee may provide recommendations to the department
26at any time that the residents of the district and the
27department consider the feasibility of incorporating as a viable
28municipality or merger or consolidation with an existing
29municipality.

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

1(1) Amendments to the governing standards may be
2recommended by a majority vote of the district advisory
3committee or by a petition signed by registered electors of
4the municipality comprising at least 10% of the number of
5electors voting for the office of Governor in the last
6gubernatorial general election.

7(2) Upon receipt of a recommendation made under this
8subsection, the administrator shall include the recommended
9amendments to the governing standard as a proposed plan
10amendment under section 444, unless the administrator finds
11that the recommended amendment of the governing standards is
12unlawful, unconstitutional or would substantially impede the
13administration of the essential services plan.

14(i) Restrictions.--The district advisory committee shall
15have no authority to act as a municipal governing body.

16(j) Open meetings.--The district advisory committee shall be
17an agency for purposes of the open meeting provisions of 65
18Pa.C.S. Ch.7 (relating to open meetings).

19Section 443. Assessments.

20(a) Authority to assess.--The administrator may establish
21assessments on a front foot or benefit-conferred basis, or a
22combination of both, on all real property within the district to
23provide for:

24(1) The cost of all essential services provided to the
25district.

26(2) The service of all debts held in trust by the
27Commonwealth which were incurred by the former municipality
28prior to disincorporation.

29(3) The necessary construction, maintenance or repair of
30facilities or properties which have been conveyed to the

1Commonwealth and are held in trust for the benefit of the
2district.

3(4) Reimbursement to the department of its reasonable
4costs of administration of the district, including, but not
5limited to, the compensation of the administrator and the
6collection of assessments authorized under this section.

7(5) Other costs incurred by the district or
8administrator in the execution of this subchapter, including
9a reserve of no more than 15% of the annual estimated costs
10of the essential services plan in the restricted account
11established in section 445 to provide for the provision of
12unforeseeable costs.

13(b) Establishment of assessment.--

14(1) No later than October 1 of the year preceding the
15year for which the assessment applies, the administrator
16shall establish a schedule of assessment for all real
17property within the unincorporated district.

18(2) The administrator shall provide written personal
19notice to each property owner of each property of the
20assessment due for the ensuing year no later than November 1
21of the year preceding the year for which the assessment
22applies.

23(3) As used in this subsection, "personal notice" shall
24mean and include notice upon the owner of a property either
25by personal service upon the owner or by certified mail to
26the owner at the owner's last known address or where service,
27after a reasonable attempt, shall not have been successfully
28made by either of these two methods, then by leaving notice
29at or upon the property.

30(c) Appeal of assessment.--Any person wishing to challenge

1the reasonableness of the assessment may file a suit in the
2court of common pleas within 30 days of receiving the notice
3provided in subsection (b).

4(d) Payment of assessments.--Payment of the assessment in
5full shall be due no later than March 1, unless the
6administrator has provided for installment payments in
7accordance with subsection (e).

8(e) Installments.--The administrator may provide for the
9payment of assessments by equal installments on a quarterly or
10semiannual basis as follows:

11(1) The administrator shall provide written personal
12notice of the installment plan to owners containing the date
13installments are due, interest and prepayment.

14(2) The rate of interest for the installments shall be
15established by the administrator at a rate of 6% per year.

16(3) If any of the installments remain unpaid for 60 days
17after the same has become due and payable, the entire unpaid
18assessment, plus unpaid accrued interest and any costs, shall
19be due and payable and the administrator shall proceed to
20collect the assessment due as provided in subsection (g).

21(4) A property owner upon whom an assessment has been
22made may pay all or as many of the installments before the
23same are due, with interest and costs to the due date of the
24next installment.

25(f) First year assessment.--The administrator may provide
26for a partial assessment for the calendar year in which the
27disincorporation of the municipality occurs. The due date for a
28partial year assessment and installment schedule may be set by
29the administrator, provided that no assessment shall be due
30sooner than 60 days after the administrator provides written

1personal notice of the assessment under the procedure in
2subsection (a).

3(g) Delinquent assessments.--Assessments remaining unpaid on
4December 31 of the year in which they are due shall be
5delinquent and subject to interest at a rate of 10% per year
6from the date of filing as a lien in accordance with the act of
7May 16, 1923 (P.L.207, No.153), referred to as the Municipal
8Claim and Tax Lien Law.

9(h) Liens.--An assessment, together with all charges,
10expenses and fees, including reasonable attorney fees necessary
11for its collection, shall be a lien upon the real property
12benefited. The lien shall have the same priority and may be
13collected in the same manner as a municipal lien in accordance
14with the Municipal Claim and Tax Lien Law or through a civil
15action initiated by the administrator.

16(i) Limited assessment of public property.--An assessment
17under this section on property held by the Federal Government,
18the Commonwealth and any other public property shall be limited
19to an assessment for those services which are directly consumed
20by the property, including, but not limited to, water service,
21sewer service and waste collection.

22Section 444. Amendment of essential services plan.

23(a) Periodic review.--No less than once per year, the
24administrator shall meet with the district advisory committee to
25consider the adequacy of the essential services plan and
26consider any request for revision of the essential services plan
27made by the district advisory committee.

28(b) Filing of amendment.--The administrator may file a
29proposed essential services plan amendment with the secretary
30and each member of the district advisory committee at any time.

1The district advisory committee may request a public meeting to
2consider the amendment within five days of the filing of a
3proposed essential services plan amendment.

4(c) Notice of amendment.--No later than the date that the
5administrator files the proposed essential services plan
6amendment, the administrator shall provide notice to the public
7of the amended essential services plan using the procedure
8provided for by section 437(c)(1). If the district advisory
9committee requests a public hearing, the administrator shall
10schedule a public meeting within 30 days of the date that the
11proposed essential services plan amendment was filed and provide
12notice of the public meeting using the procedure provided for by
13section 437(c)(2).

14(d) Comment period.--Written comments on the proposed
15essential services plan amendment may be filed with the
16administrator. Written comments must be made no later than 15
17days after the date of filing. Written comments judged by the
18administrator to have value to the essential services plan may
19be used to develop revisions for a final essential services plan
20amendment.

21(e) Administrator's public meeting.--If a public meeting is
22scheduled at the request of the district advisory committee, the
23administrator shall request in writing that the members of the
24district advisory committee be present at the administrator's
25meeting. At that meeting, the administrator shall:

26(1) Present a summary of the proposed essential services
27plan amendment.

28(2) Receive public comment on the proposed essential
29services plan amendment.

30(3) Allow the members of the district advisory committee

1to present written and oral comments requesting revisions of
2the proposed essential services plan amendment.

3(f) Final essential services plan amendment.--The
4administrator shall consider all timely submitted written
5comments, comments presented at the public meeting and requests
6for revision in the amendment of the publicly presented proposed
7essential services plan before filing a final essential services
8plan amendment. In the event that the administrator does not
9incorporate the requests for revision by the district advisory
10committee regarding the levels of services provided under the
11essential services plan or the basis for the calculation of fees
12assessed under the essential services plan, the administrator
13shall state in the essential services plan amendment why the
14requested revisions were not feasible to incorporate in the
15final essential services plan.

16(g) Emergency essential services plan amendment.--
17Notwithstanding the requirements provided by this section for
18the adoption of a final essential services plan amendment, where
19the secretary finds that there is or will be an imminent threat
20to public safety, human health or the environment, the secretary
21may provide a waiver to the administrator allowing the
22administrator to immediately publish an emergency essential
23services plan amendment. An emergency essential services plan
24amendment shall take effect immediately.

25(h) Notice of final essential services plan amendment.--The
26administrator shall provide notice of the publication of the
27final essential services plan amendment or emergency essential
28services plan amendment in the manner provided in section 437(c)
29(1)(i), (ii) and (v). Upon providing notice as required by this
30chapter, the administrator may execute any contract necessary to

1administer the essential services plan, as amended.

2(i) Appeal.--

3(1) Any person aggrieved by a final essential services
4plan amendment or emergency essential services plan amendment
5may appeal the final essential services plan amendment to the
6court of common pleas within 30 days of notice of the filing
7of the final essential services plan amendment.

8(2) For purposes of this section, notice shall
9constitute the date that the person received actual notice of
10the final essential services plan amendment, or the date that
11notice of the filing of the final essential services plan
12amendment is first published in a newspaper with general
13circulation serving the area in which the municipality is
14located.

15(3) An appeal of a final essential services plan
16amendment shall be limited to the amended portion of the
17essential services plan.

18(4) No appeal of a final essential services plan
19amendment shall constitute an automatic stay of any portion
20of the essential services plan.

21(5) The appeal shall be sustained only where the court
22finds that the final essential services plan amendment is
23unlawful or unconstitutional, or the conduct of the
24administrator is arbitrary or capricious.

25Section 445. Unincorporated Service District Trust Fund.

26(a) Establishment.--There is hereby established a special
27fund in the State Treasury, separate and apart from all other
28public moneys or funds of the Commonwealth, to be known as the
29Unincorporated Service District Trust Fund. The purpose of this
30fund shall be to hold moneys from unincorporated service

1districts and pay for the expenses and obligations of
2administrators, unincorporated service districts and the
3department pursuant to Subchapter C. The department shall
4allocate funds specific to a district in a restricted account
5pursuant to section 445.1.

6(b) Appropriation.--As much as may be necessary of such
7moneys and interest in the special fund established under
8subsection (a) is hereby appropriated for the purposes
9authorized by this subchapter.

10Section 445.1. Restricted accounts.

11(a) Establishment.--There is established in the
12Unincorporated Service District Trust Fund a restricted account
13for each unincorporated service district. The administrator for
14each district shall deposit all moneys collected by assessments,
15delinquent municipal tax receipts, and proceeds from the sale of
16municipal assets authorized under this subchapter into the
17restricted account not later than 30 days after collection. Any
18interest accrued on the account shall be credited to the account
19for purposes of meeting the requirements of this subchapter. The
20restricted account shall be used to pay for the expenses and
21obligations of the administrator and the unincorporated service
22district. The department may pay for the compensation and
23expenses of the administrator from the restricted account.

24(b) Appropriation.--As much as may be necessary of such
25moneys and interest in the restricted account established under
26subsection (a) is hereby appropriated for the purposes
27authorized by this subchapter.

28Section 446. Audit.

29The Auditor General shall conduct an annual audit of the
30district. The audit shall include a review of the services

1rendered under the essential services plan, the proceeds
2generated by the assessments levied pursuant to section 443 and
3all transactions made by the administrator on behalf of the
4district.

5Section 447. Merger and consolidation; incorporation of
6municipal corporation.

7(a) Merger and consolidation.--

8(1) For the limited purpose of merging or consolidating
9with one or more surrounding municipalities under 53 Pa.C.S.
10Ch. 7 Subch. C (relating to consolidation and merger), the
11residents of the district may file a petition with the county
12board of elections as provided in 53 Pa.C.S. §§ 735 (relating
13to initiative of electors seeking consolidation or merger
14without new home rule charter) and 735.1 (relating to
15initiative of electors seeking consolidation or merger with
16new home rule charter).

17(2) Residents of the district may be nominated to, and
18serve on, a commission formed to study merger or
19consolidation of the district with one or more
20municipalities.

21(3) Upon favorable action by the electorate on
22consolidation or merger, the administrator, in consultation
23with the district advisory committee, may enter into a merger
24or consolidation agreement with the governing bodies of other
25municipalities in accordance with 53 Pa.C.S. § 737 (relating
26to consolidation or merger agreement) and shall provide for
27the transition of the district into a consolidated or merged
28municipality with the same powers and duties as provided by
29law to governing bodies of municipalities.

30(4) The administrator may expend district funds to the

1extent authorized by law for the purpose of merger,
2consolidation or incorporation as provided in subsection (b).

3(b) Incorporation as municipality.--If the secretary
4determines that the district could be incorporated as a viable
5municipality, the residents of the district may establish or
6incorporate the territory of the district as a municipality as
7provided by law.

8(c) Grants permitted.--The department may issue any loan or
9grant authorized under Chapter 3 to a merged, consolidated or
10subsequently incorporated municipality, including the territory
11of the district to provide transitional assistance.

12(d) Assets in trust.--All assets conveyed to the
13Commonwealth to be held in trust, not otherwise transferred
14under the essential services plan or sold to repay the debt of
15the former municipality, shall be conveyed to a merged,
16consolidated or subsequently incorporated municipality,
17including the territory of the district.

18(e) Assumption of debt.--All debt obligations held in trust
19by the Commonwealth on behalf of the former municipality for
20service by a district shall be assumed by a merged, consolidated
21or subsequently incorporated municipality, including the
22territory of the district.

23Section 25. Chapter 5 of the act is repealed:

24[CHAPTER 5

25FUNDING

26Section 501. Appropriation.

27The sum of $5,000,000, appropriated under section 210 of the
28act of July 1, 1986 (P.L.1776, No.5A), known as the General
29Appropriation Act of 1986, shall be used to carry out the
30provisions of this act. The appropriation shall be distributed

1as follows:

2(1) $500,000 shall be used by the department for
3administrative expenses necessary to carry out the provisions
4of this act.

5(2) $4,500,000 shall be used to provide grants and loans
6to municipalities determined to be financially distressed
7pursuant to this act.]

8Section 26. Chapter 6 heading of the act, added October 20,
92011 (P.L.318, No.79), is amended to read:

10CHAPTER 6

11FISCAL EMERGENCIES IN [CITIES OF THE

12THIRD CLASS] MUNICIPALITIES

13Section 27. Sections 601, 602 and 603 of the act, renumbered
14and added October 20, 2011 (P.L.318, No.79), are amended to
15read:

16Section 601. Definitions.

17The following words and phrases when used in this chapter
18shall have the meanings given to them in this section unless the
19context clearly indicates otherwise:

20"Authority." A municipal authority, parking authority or any
21other authority or corporate entity that is directly or
22indirectly controlled by a distressed [city] municipality or to
23which a distressed [city] municipality has power of appointment.
24The term shall not include a joint municipal authority.

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

26"Debt obligations." Any obligation to pay money, including
27amounts owed for payments relating to lease rental debt, debt
28service, bonds, notes, guarantees for bonds or notes, trust
29indentures, contracts or other agreements.

30"Distressed [city] municipality." A [city] municipality

1which has been determined to be financially distressed under
2section 203(f).

3"Fiscal emergency." A determination made by the Governor
4under section 602(b).

5"Insolvent." Unable to meet all financial obligations as
6they become due, including payment of debt obligations.

7"Municipality." A municipality as defined in section 103,
8other than a city of the first class.

9"Vital and necessary services." Basic and fundamental
10municipal services, including any of the following:

11(1) Police and fire services.

12(2) Ambulance and rescue services.

13(3) Water supply and distribution.

14(4) Wastewater services.

15(5) Refuse collection and disposal.

16(6) Snow removal.

17(7) Payroll and pension obligations.

18(8) Fulfillment of payment of debt obligations or any
19other financial obligations.

20Section 602. Declaration of fiscal emergency.

21(a) Fiscal emergency.--The Governor determines a fiscal
22emergency exists if the distressed [city] municipality:

23(1) (i) is insolvent or is projected to be insolvent
24within 180 days or less; [or] and

25(ii) is unable to ensure the continued provision of
26vital and necessary services; [and] or

27(2) [(i)] has failed to adopt or implement:

28(i) the coordinator's plan in accordance with 
29Subchapter C or C.1 of Chapter 2; or

30(ii) [has failed to adopt or implement] an

1alternative plan that the secretary has approved under
2section 246.

3(b) Governor.--Upon making a determination that a state of
4fiscal emergency exists, the Governor may declare a state of
5fiscal emergency within the distressed [city] municipality.
6Immediately upon making the declaration, the Governor shall:

7(1) Provide written notice of the declaration to the 
8governing body and, if applicable, the chief executive 
9officer of the distressed [city] municipality along with a 
10concise statement of facts supporting the determination.

11(2) Direct the secretary to, within ten days of the
12Governor's declaration, develop an emergency action plan to
13ensure that vital and necessary services are maintained
14within the [city] municipality during the state of fiscal
15emergency.

16(c) Secretary.--In developing the emergency action plan, the
17secretary shall consider the financial plan prepared by the
18coordinator under Subchapter C of Chapter 2 and any other
19available plan or information the secretary deems appropriate
20and may employ financial or legal experts to assist in
21addressing the fiscal emergency. Notwithstanding any law to the
22contrary, the employment of such experts shall not be subject to
23contractual competitive bidding procedures.

24Section 603. Notification by the secretary.

25(a) Notice.--Upon completion of the emergency action plan,
26the secretary shall cause the plan to be posted on the
27department's publicly accessible Internet website and shall
28provide written notice of the emergency action plan by overnight
29delivery service, providing proof of receipt, to all members of
30the governing body and, if applicable, the chief executive

1officer of the distressed [city] municipality.

2(b) Publication.--The secretary shall publish once in a
3newspaper of general circulation notice that the emergency
4action plan has been completed. The notice shall specify the
5publicly accessible Internet address of the department's website
6where the plan is posted.

7Section 28. Sections 604, 605, 606, 607, 608, 609 and 610 of
8the act, added October 20, 2011 (P.L.318, No.79), are amended to
9read:

10Section 604. Powers of the Governor.

11(a) Powers.--During the state of fiscal emergency, the
12Governor may exercise the authority of the elected or appointed
13officials of the distressed [city] municipality or authority as
14necessary to ensure the provision of vital and necessary
15services and may delegate the authority to the secretary or a
16designee of the secretary. The emergency powers of the Governor
17shall include the following:

18(1) The power to collect funds payable to the distressed
19[city] municipality and authority and use those funds to pay
20for vital and necessary services.

21(2) The power to obtain emergency financial aid for the
22distressed [city] municipality and authority under Chapter 3
23to pay for vital and necessary services.

24(3) The power to enter into contracts and agreements on
25behalf of the distressed [city] municipality and authority to
26pay for vital and necessary services.

27(4) The power to modify the emergency action plan as
28necessary to ensure the provision of vital and necessary
29services.

30(5) Any other power of the elected or appointed

1officials of the distressed [city] municipality or authority
2to ensure the provision of vital and necessary services.

3(b) Orders.--The Governor may issue an order to an elected
4or appointed official of the distressed [city] municipality or
5an authority to implement any provision of the emergency action
6plan or refrain from taking any action that would interfere with
7the powers granted to the Governor or the goals of the plan. An
8order issued under this subsection shall be enforceable under
9section 606.

10(c) Authorization prohibited.--Neither this chapter nor the
11emergency action plan shall be interpreted to authorize the
12Governor to:

13(1) Unilaterally levy taxes.

14(2) Unilaterally abrogate, alter or otherwise interfere
15with a lien, charge, covenant or relative priority that is:

16(i) held by a holder of a debt obligation of a
17distressed [city] municipality; and

18(ii) granted by the contract, law, rule or
19regulation governing the debt obligation.

20(3) Unilaterally impair or modify existing bonds, notes,
21municipal securities or other lawful contractual or legal
22obligations of the distressed [city] municipality or
23authority[, except as otherwise ordered by a court of
24competent jurisdiction].

25(4) Authorize the use of the proceeds of the sale,
26lease, conveyance, assignment or other use or disposition of
27the assets of the distressed [city] municipality or
28authorities in a manner contrary to section 707.

29(5) Pledge the full faith and credit of the
30Commonwealth.

1Section 605. Elected and appointed officials.

2During a fiscal emergency, the authorities and appointed and
3elected officials of the distressed [city] municipality shall
4continue to carry out the duties of their respective offices,
5except that no decision or action shall conflict with an
6emergency action plan, order or exercise of power by the
7Governor under section 604.

8Section 606. Mandamus.

9The Governor may petition Commonwealth Court to issue a writ
10of mandamus upon any elected or appointed official of the
11distressed [city] municipality or authority to secure compliance
12with an order issued under section 604(b). The court shall grant
13the relief requested within 14 days of the filing of the
14petition if it determines that the order was issued in
15compliance with this chapter.

16Section 607. Consent agreement.

17(a) Negotiations.--Within eight days of the declaration of a
18fiscal emergency, the governing body and, if applicable, the
19chief executive officer of the distressed [city] municipality
20shall convene a special public meeting to negotiate a consent
21agreement. The meeting shall be attended by the secretary or
22secretary's designee. Negotiations among creditors and any of
23the parties in this subsection shall be conducted in accordance
24with section 223(b).

25(b) Contents.--

26(1) The consent agreement shall incorporate a plan
27setting forth measures designed to provide long-term
28financial stability to the distressed [city] municipality
29after the termination of the fiscal emergency.

30(2) The consent agreement shall include all of the

1following:

2(i) Continued provision of vital and necessary
3services.

4(ii) Payment of the lawful financial obligations of 
5the distressed [city] municipality and authority. This 
6subparagraph includes debt obligations, municipal 
7securities, lease rental obligations, legal obligations 
8and consensual modifications of existing obligations, 
9except as otherwise ordered by a court of competent 
10jurisdiction.

11(iii) Timely deposit of required payments to the
12pension fund for the distressed [city] municipality and
13each authority or the fund in which the distressed [city]
14municipality and each authority participates.

15(iv) Legislative and administrative actions to be
16taken by the elected or appointed officials of the
17distressed [city] municipality during the term of the
18consent agreement.

19(3) The consent agreement may include:

20(i) The sale, lease, conveyance, assignment or other
21use or disposition of the assets of the distressed [city]
22municipality or authority.

23(ii) Approval, modification, rejection,
24renegotiation or termination of contracts or agreements
25of the distressed [city] municipality or authorities.

26(iii) Execution of new contracts or agreements.

27(4) The consent agreement may not include any of the
28following:

29(i) Projections of revenue from a tax or tax rate
30not currently authorized by law.

1(ii) Provisions that unilaterally abrogate, alter or
2otherwise interfere with a lien, charge, covenant or
3relative priority, that is:

4(A) held by a holder of a debt obligation of a
5distressed [city] municipality; and

6(B) granted by the contract, law, rule or
7regulation governing the debt obligation.

8(iii) Provisions that unilaterally impair or modify
9existing bonds, notes, municipal securities or other
10lawful contractual or legal obligations of the distressed
11[city] municipality or authority[, except as otherwise
12ordered by a court of competent jurisdiction].

13(iv) Provisions that authorize the use of the
14proceeds of the sale, lease, conveyance, assignment or
15other use or disposition of the assets of the distressed
16[city] municipality or authorities in a manner contrary
17to section 707.

18(v) Any increase in the rate of an earned income tax
19imposed on nonresident workers.

20(c) Ordinance.--Notwithstanding any law to the contrary, the
21following shall apply:

22(1) Upon approval by a majority vote of the governing
23body of the distressed [city] municipality, the consent
24agreement shall be presented to the secretary within 20 days
25of the declaration of fiscal emergency.

26(2) The secretary shall approve or disapprove the
27consent agreement within three days.

28(3) If the secretary determines that the consent
29agreement is sufficient to overcome the distressed [city's]
30municipality's financial distress and approves the agreement,

1the governing body shall enact the consent agreement in the
2form of an ordinance within seven days of approval by the
3secretary.

4(4) The ordinance shall provide that, in the event of a
5breach or unilateral modification of the consent decree by
6the governing body or an elected or appointed official, the
7Governor may institute or reinstitute proceedings under
8Chapter 7.

9(d) Consent to proceedings under Chapter 7.--In addition to
10breach or modification of the consent agreement under subsection
11(c), the following shall be deemed consent to proceedings under
12Chapter 7:

13(1) Failure of the governing body of the distressed
14[city] municipality to convene or the failure of a quorum of
15the governing body to participate in a special public meeting
16required by subsection (a).

17(2) Failure of the governing body or, if applicable, the
18chief executive officer to enact a valid ordinance under
19subsection (c).

20(3) Failure of the distressed [city] municipality to
21comply with the consent agreement or provision of an
22ordinance enacted under subsection (c).

23(4) Enactment by the distressed [city] municipality of
24an amendment to the ordinance enacted in subsection (c) in
25violation of subsection (e).

26(e) Amendment.--The ordinance may be amended upon the
27approval of the secretary.

28(f) Collective bargaining.--A collective bargaining
29agreement or arbitration settlement executed following the
30enactment of an ordinance under this section may not in any

1manner violate, expand or diminish the provisions of the consent
2agreement, provided, however, that the provisions of section 252 
3shall apply to any consent agreement adopted in accordance with 
4this subchapter.

5Section 608. Termination of fiscal emergency and suspension of
6powers.

7(a) [Financial] Fiscal emergency.--A fiscal emergency shall
8end upon certification by the secretary that the [city is no
9longer financially distressed.] municipality:

10(1) is solvent and is not projected to be insolvent
11within 180 days or less; and

12(2) is able to ensure the continued provision of vital
13and necessary services after the termination of the fiscal
14emergency.

15(b) Governor's powers.--The emergency powers of the Governor
16under this chapter shall be suspended upon the enactment and
17continued implementation of an ordinance under section 607 or
18entry of a judicial order appointing a receiver under section
19702.

20Section 609. Restrictions.

21(a) Earned income tax on nonresidents.--A distressed [city]
22municipality subject to this chapter or Chapter 7 may not
23petition a court of common pleas for an increase in the rate of
24an earned income tax imposed on nonresident workers under
25section 123(c) [until the secretary terminates the distress
26status of the city under section 253] unless the conditions 
27under section 710.1(c) are met.

28(b) Municipal debt adjustment.--A distressed [city]
29municipality subject to this chapter or Chapter 7 may not file a
30municipal debt adjustment action under the Bankruptcy Code (11

1U.S.C. § 101 et seq.) except to the extent authorized under
2Chapter 7.

3Section 610. Applicability.

4(a) Statement.--

5(1) This chapter shall apply only to distressed [cities]
6municipalities.

7(2) Except as set forth in subsection (b), nothing in
8this chapter is intended to limit or otherwise abrogate the
9applicability of any other part of this act.

10(b) Conflict.--If there is a conflict between a provision of
11this chapter and any other provision of this act, the provision
12of this chapter shall prevail.

13Section 29. Chapter 7 heading of the act, added October 20,
142011 (P.L.318, No.79), is amended to read:

15CHAPTER 7

16RECEIVERSHIP IN [CITIES OF THE

17THIRD CLASS] MUNICIPALITIES

18Section 30. Sections 701, 702, 703, 704, 705(g), 706, 707,
19708 and 709 of the act, added October 20, 2011 (P.L.318, No.79),
20are amended to read:

21Section 701. Definitions.

22The following words and phrases when used in this chapter
23shall have the meanings given to them in this section unless the
24context clearly indicates otherwise:

25"Authority." A municipal authority, parking authority or any
26other authority or corporate entity that is directly or
27indirectly controlled by a distressed [city] municipality or to
28which a distressed [city] municipality has power of appointment.
29The term shall not include a joint municipal authority.

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

1"Debt obligations." Any obligation to pay money, including
2amounts owed for payments relating to lease rental debt, debt
3service, bonds, notes, guarantees for bonds or notes, trust
4indentures, contracts or other agreements.

5"Distressed [city] municipality." A [city] municipality
6which has been determined to be financially distressed under
7section 203(f).

8"Fiscal emergency." A determination made by the Governor
9under section 602(b).

10"Insolvent." Unable to meet all financial obligations as
11they become due, including payment of debt obligations.

12"Vital and necessary services." Basic and fundamental
13municipal services, including any of the following:

14(1) Police and fire services.

15(2) Ambulance and rescue services.

16(3) Water supply and distribution.

17(4) Wastewater services.

18(5) Refuse collection and disposal.

19(6) Snow removal.

20(7) Payroll and pension obligations.

21(8) Fulfillment of payment of debt obligations or any
22other financial obligations.

23Section 702. Receivership.

24(a) Receiver.--Following the issuance of a declaration of
25fiscal emergency under section 602(b), the Governor may direct
26the secretary to file a petition in Commonwealth Court to
27appoint the individual named in the petition as a receiver for
28the distressed [city] municipality. The court shall have no
29authority to appoint anyone other than the individual named in
30the petition as the receiver.

1(b) Service and notice.--

2(1) The secretary shall serve the petition upon:

3(i) the governing body of the distressed [city]
4municipality;

5(ii) the chief executive officer of the distressed
6[city] municipality; and

7(iii) the governing body of each authority.

8(2) The secretary must publish notice of the filing of
9the petition once in a newspaper of general circulation.

10(c) Hearing.--Upon notification of the Governor of the
11failure of the distressed [city] municipality to adopt a valid
12ordinance under section 607, Commonwealth Court shall conduct a
13hearing within 15 days on the petition.

14(d) Determination.--No later than 60 days following the
15filing of a petition under this section, the court shall issue
16an order under subsection (e) if it finds by a preponderance of
17the evidence that all of the following apply:

18(1) Thirty days have passed since the declaration of a
19fiscal emergency.

20(2) There has been a failure by:

21(i) the governing body of the distressed [city]
22municipality to adopt an ordinance under section 607;

23(ii) the governing body of the distressed [city]
24municipality to implement an ordinance under section 607;
25[or]

26(iii) an elected or appointed official of the
27distressed city or authority to strictly comply with an
28order issued by the Governor under section 604[.]; or

29(iv) (Reserved).

30(3) A fiscal emergency under section 602(a) continues to

1exist.

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

3(1) set forth the findings under subsection (d);

4(2) grant the petition and declare the distressed [city]
5municipality to be in receivership;

6(3) appoint the individual named in the petition to be
7the receiver for a period not to exceed two years, subject to
8extension under section 710(b);

9(4) direct the receiver to develop a recovery plan
10within 30 days under section 703 and submit it to the court,
11the secretary, the governing body and, if applicable, the
12chief executive officer of the distressed [city]
13municipality; and

14(5) require and empower the receiver to implement the
15emergency action plan developed by the secretary under
16section 602 until a recovery plan developed by the receiver
17is approved by the court under section 703.

18(f) Additional actions.--

19(1) The Governor may direct the secretary to file a
20petition in Commonwealth Court to appoint an individual named
21in the petition as a receiver for the distressed [city]
22municipality if the distressed [city] municipality fails to
23comply with or has amended the ordinance without the approval
24of the secretary under section 607(d)(3) or (4).

25(2) The court shall conduct a hearing on the petition
26under paragraph (1) within 15 days of the filing of the
27petition.

28(3) No later than 60 days following the filing of the 
29petition under paragraph (1), the court shall issue an order 
30under subsection (e) if it finds by a preponderance of the
 

1evidence that the distressed [city] municipality has failed 
2to comply with section 607(d)(3) or (4).

3Section 703. Recovery plan.

4(a) Issuance.--Within 30 days of the appointment of the
5receiver, the recovery plan required under section 702(e)(4)
6shall be furnished to Commonwealth Court, the secretary and the
7governing body and, if applicable, the chief executive officer
8of the distressed [city] municipality.

9(b) Contents.--The receiver shall consider the plan prepared
10by the coordinator under section 241 and any other existing
11alternate plans in the development of the recovery plan. The
12following shall apply:

13(1) The recovery plan shall provide for all of the
14following:

15(i) Continued provision of vital and necessary
16services.

17(ii) Payment of the lawful financial obligations of 
18the distressed [city] municipality and authorities. This 
19subparagraph includes debt obligations, municipal 
20securities, lease rental obligations, legal obligations 
21and consensual modifications of existing obligations.

22(iii) Timely deposit of required payments to the
23pension fund in which the distressed [city] municipality
24and each authority participates.

25(2) The recovery plan may include:

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

29(ii) the approval, modification, rejection,
30renegotiation or termination of contracts or agreements

1of the distressed [city] municipality or authorities,
2except to the extent prohibited by the Constitutions of
3the United States and Pennsylvania;

4(iii) the execution of new contracts or agreements;
5and

6(iv) other information the receiver deems
7appropriate.

8(c) Restrictions.--The recovery plan may not do any of the
9following:

10(1) Unilaterally levy taxes.

11(2) Unilaterally abrogate, alter or otherwise interfere
12with a lien, charge, covenant or relative priority that is:

13(i) held by a holder of a debt obligation of a
14distressed [city] municipality; and

15(ii) granted by the contract, law, rule or
16regulation governing the debt obligation.

17(3) Unilaterally impair or modify existing bonds, notes,
18municipal securities or other lawful contractual or legal
19obligations of the distressed [city] municipality or
20authority[, except as otherwise ordered by a court of
21competent jurisdiction].

22(4) Authorize the use of the proceeds of the sale,
23lease, conveyance, assignment or other use or disposition of
24the assets of the distressed [city] municipality or authority
25in a manner contrary to section 707.

26(d) Confirmation.--Commonwealth Court shall conduct a
27hearing on the recovery plan within 30 days of the receipt of
28the plan from the receiver. The court shall confirm the plan
29within 60 days of the receipt of the plan unless it finds clear
30and convincing evidence that the plan is arbitrary, capricious

1or wholly inadequate to alleviate the fiscal emergency in the
2distressed [city] municipality.

3(e) Modification of plan.--The receiver shall notify the
4Commonwealth Court of any modification to the plan. The court
5may conduct a hearing on the modification within 30 days of its
6receipt. The court shall confirm the modification within 60 days
7of receipt of notification of the modification unless it finds
8clear and convincing evidence that the recovery plan as modified
9is arbitrary, capricious or wholly inadequate to alleviate the
10fiscal emergency in the distressed [city] municipality.

11Section 704. Confirmation.

12(a) Effect of confirmation.--The confirmation of the
13recovery plan and any modification to the receiver's plan under
14section 703 shall have the effect of:

15(1) imposing on the elected and appointed officials of
16the distressed [city] municipality or an authority a
17mandatory duty to undertake the acts set forth in the
18recovery plan;

19(2) suspending the authority of the elected and
20appointed officials of the distressed [city] municipality or
21an authority to exercise power on behalf of the distressed
22[city] municipality or authority pursuant to law, charter,
23ordinance, rule or regulation to the extent that the power
24would interfere with the powers granted to the receiver or
25the goals of the recovery plan; and

26(3) superseding the emergency action plan developed by
27the secretary under section 602.

28(b) Form of government.--Confirmation of the recovery plan
29and any modification to the plan under section 703 shall not be
30construed to:

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

3(2) except as set forth in subsection (a), affect powers
4and duties of elected and appointed officials of the
5distressed [city] municipality or an authority.

6(c) Collective bargaining.--A collective bargaining
7agreement or arbitration settlement executed after confirmation
8of a recovery plan may not, in any manner, violate, expand or
9diminish the provisions of the recovery plan, provided, however, 
10that the provisions of section 252 shall apply to any recovery 
11plan adopted in accordance with this chapter.

12Section 705. Receiver.

13* * *

14(g) Liability.--The receiver shall not be liable personally 
15for any obligations of the distressed [city] municipality or 
16authority. It is declared to be the intent of the General 
17Assembly that the receiver shall enjoy sovereign and official 
18immunity as provided in 1 Pa.C.S. § 2310 (relating to sovereign 
19immunity reaffirmed; specific waiver) and shall remain immune 
20from suit except as provided by and subject to the provisions of 
2142 Pa.C.S. Ch. 85 Subchs. A (relating to general provisions) and 
22B (relating to actions against Commonwealth parties).

23Section 706. Powers, duties and prohibited actions.

24(a) Powers and duties.--Notwithstanding any other provision
25of law, the receiver shall have the following powers and duties:

26(1) To require the distressed [city] municipality or
27authority to take actions necessary to implement the recovery
28plan under section 703.

29(2) To modify the recovery plan as necessary to achieve
30financial stability of the distressed [city] municipality and

1authorities in accordance with section 703.

2(3) To require the distressed [city] municipality or
3authority to negotiate intergovernmental cooperation
4agreements between the distressed [city] municipality and
5other political subdivisions in order to eliminate and avoid
6deficits, maintain sound budgetary practices and avoid
7interruption of municipal services.

8(4) To submit quarterly reports to the governing body
9and, if applicable, the chief executive officer of the
10distressed [city] municipality and to the department. The
11reports shall be posted on [the] a publicly accessible
12Internet website [for] maintained by the distressed [city]
13municipality.

14(5) To require the distressed [city] municipality or
15authority to cause the sale, lease, conveyance, assignment or
16other use or disposition of the distressed [city's]
17municipality's or authority's assets in accordance with
18section 707.

19(6) To approve, disapprove, modify, reject, terminate or
20renegotiate contracts and agreements with the distressed
21[city] municipality or authority, except to the extent
22prohibited by the Constitutions of the United States and
23Pennsylvania.

24(7) To direct the distressed [city] municipality or
25authority to take any other action to implement the recovery
26plan.

27(8) To attend executive sessions of the governing body
28of the distressed [city] municipality or authority and make
29reports to the public on implementation of the recovery plan.

30(9) [After July 1, 2012, to] To file a municipal debt
 

1adjustment action under the Bankruptcy Code (11 U.S.C. § 101 
2et seq.) and to act on the [city's] municipality's behalf in 
3the proceeding. The power under this paragraph shall only be 
4exercised upon the written authorization of the secretary. 
5The filing of a municipal debt adjustment action under this 
6paragraph and any plan of the receiver accepted by the 
7Federal court shall be considered a modification of the 
8recovery plan, except that the modification shall not be 
9subject to judicial review under section 709. A recovery plan 
10submitted to and approved by the Federal court under a 
11Federal municipal debt adjustment action may include Federal 
12remedies not otherwise available under this chapter.

13(10) To meet and consult with the advisory committee
14under section 711.

15(11) To employ financial or legal experts deemed
16necessary to develop and implement the recovery plan.
17Notwithstanding any law to the contrary, the employment of
18such experts shall not be subject to contractual competitive
19bidding procedures.

<-20(12) To make a recommendation to the secretary that the
21municipality be disincorporated in accordance with Chapter 4.

22(b) Authorization prohibited.--Neither this chapter nor the
23recovery plan shall be interpreted to authorize the receiver to
24do any of the following:

25(1) Unilaterally levy taxes.

26(2) Unilaterally abrogate, alter or otherwise interfere
27with a lien, charge, covenant or relative priority that is:

28(i) held by a holder of a debt obligation of a
29distressed [city] municipality; and

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

1regulation governing the debt obligation.

2(3) Unilaterally impair or modify existing bonds, notes,
3municipal securities or other lawful contractual or legal
4obligations of the distressed [city] municipality or
5authority[, except as otherwise ordered by a court of
6competent jurisdiction].

7(4) Authorize the use of the proceeds of the sale, 
8lease, conveyance, assignment or other use or disposition of 
9the assets of the distressed [city] municipality or authority 
10in a manner contrary to section 707.

11Section 707. Use or disposition of assets.

12(a) Use of proceeds.--The proceeds from any sale, lease,
13conveyance, assignment or other use or disposition of assets of
14the distressed [city] municipality or authority shall be applied
15to the payment of outstanding debt obligations owed by the
16distressed [city] municipality or authority, subject to any
17lien, charge, covenant, restriction, contract, law, rule or
18regulation, that encumbers or is otherwise applicable to the
19assets. Proceeds remaining after payment of outstanding debt
20obligations owed by the distressed [city] municipality or
21authority may be used by the receiver to restructure or provide
22escrow for the payment of future debt obligations or to meet
23operating and capital needs of the distressed [city]
24municipality or authority.

25(b) Prohibitions.--Nothing under this section shall be
26construed to authorize the receiver to unilaterally abrogate,
27alter or otherwise interfere with a lien, charge, covenant or
28relative priority that is:

29(1) held by a holder of a debt obligation of a
30distressed [city] municipality; and

1(2) granted by the contract, law, rule or regulation
2governing the debt obligation.

3Section 708. Elected and appointed officials.

4(a) Orders.--The receiver may issue an order to an elected
5or appointed official of the distressed [city] municipality or
6an authority to:

7(1) implement any provision of the recovery plan; and

8(2) refrain from taking any action that would interfere
9with the powers granted to the receiver or the goals of the
10recovery plan.

11(b) Enforcement.--An order issued under subsection (a) shall
12be enforceable under section 709.

13Section 709. Judicial actions.

14(a) Action by receiver.--The receiver may petition
15Commonwealth Court to issue a writ of mandamus upon any elected
16or appointed official of the distressed [city] municipality or
17authority to secure compliance with an order issued under
18section 708. The court shall grant or deny the relief within 14
19days of the filing of the petition. The court shall grant the
20relief requested if it determines that the order was issued in
21compliance with this chapter.

22(b) Action by elected or appointed officials.--Any elected 
23or appointed official of a distressed [city] municipality or 
24authority may petition Commonwealth Court to enjoin any action 
25of the receiver that is contrary to this chapter.

26Section 30.1. Section 710 of the act is amended <-by adding a 
27subsection to read:

28Section 710. Termination of receivership.

<-29* * *

<-30(a) Time.--Except as provided under subsection (b) or (c),

1the receivership under this chapter shall expire two years after
2the appointment of the receiver.

3(b) Extension.--The secretary may petition Commonwealth 
4Court for one or more extensions of the receivership. The court 
5shall grant each extension [for] of up to another two years if 
6the secretary establishes by a preponderance of the evidence 
7that further implementation of the recovery plan is necessary 
8to end the fiscal emergency.

9(c) Termination of fiscal emergency.--Notwithstanding the
10date of expiration of receivership under subsection (a) or an
11extension of receivership under subsection (b), the receivership
12shall terminate upon the secretary's termination of a fiscal
13emergency under section 608(a).

14Section 31. The act is amended by adding a section to read:

15Section 710.1. Continuation of recovery plan.

16(a) Administrative determination required.--Within 30 days
17of the termination or expiration of the receivership under
18section 710, the secretary shall issue one of the following
19administrative determinations:

20(1) conditions within the municipality warrant a
21termination in status in accordance with section 255.1; or

22(2) the municipality continues to be financially
23distressed.

24(b) Appointment of coordinator.--Upon a determination under
25subsection (a)(2), a recovery plan adopted under section 703 <-and 
26confirmed by Commonwealth Court shall remain in effect and <-shall 
27be deemed to be a plan adopted under Chapter 2. The secretary
28shall appoint a coordinator in accordance with section 221. The
29receiver may be appointed as coordinator. The coordinator shall
30implement the recovery plan under section 247(a) subject to the

1following:

2(1) The plan shall be subject to amendment in accordance
3with section 249, provided that nothing in this section shall
4authorize the impairment of existing lawful contractual or
5legal obligations of the distressed municipality except where
6otherwise permitted by law.

7(2) The coordinator may exercise the same powers and
8duties of this chapter as a receiver for the purposes of
9issuing orders under section 708, and seek enforcement of
10such orders under section 709. The Commonwealth Court shall
11retain jurisdiction to hear an action under this paragraph.

12(3) The plan shall terminate as provided in section
13254(b)(2).

<-14(c) Conditions for increasing taxes on nonresident income.--
15Notwithstanding any other provision of law, a municipality
16exiting receivership and subject to a determination under
17subsection (a)(2) shall be subject to the same requirements as a
18city of the second class A under section 123(c)(3) before being
19authorized to increase the rate of taxation on nonresident
20income.

21Section 32. Sections 711(a) and (b) and 712(a)(1) of the
22act, added October 20, 2011 (P.L.312, No.79), are amended to
23read:

24Section 711. Municipal financial recovery advisory committee.

25(a) Establishment.--[There is established a] A municipal
26financial recovery advisory committee is established to meet and
27consult with the receiver in carrying out the duties under this
28chapter. The sole function of the advisory committee shall be to
29provide recommendations and feedback to the receiver on the
30implementation of the recovery plan.

1(b) Composition.--The advisory committee established under
2subsection (a) shall be comprised of the following:

3(1) The chief executive officer, if any, of the
4distressed [city] municipality or a designee.

5(2) The president of the governing body of the
6distressed [city] municipality or a designee.

7(3) One member appointed by the county commissioners of
8the county where the distressed [city] municipality is
9located.

10(4) One member appointed by the Governor.

11* * *

12Section 712. Applicability.

13(a) Statement.--

14(1) This chapter shall apply only to distressed [cities]
15municipalities.

16* * *

17Section 33. This act shall apply as follows:

18(1) The addition of section 122(c) of the act shall
19apply to any and all regulations in effect on the effective
20date of this section.

21(2) The amendment or addition of sections 608, 710 and
22710.1(a) and (b) of the act shall not apply to a municipality
23that entered receivership prior to the effective date of this
24section and shall not supersede or constitute grounds to
25modify any order of court issued prior to the effective date
26of this section.

<-27Section 34. For tax years beginning after the effective date
28of this section, a financially distressed municipality shall be
29prohibited from using the special taxing authority in section
30607(f) of the act of December 18, 1984 (P.L.1005, No.205), known

1as the Municipal Pension Plan Funding Standard and Recovery Act,
2to impose an increase in the rate of taxation on nonresident
3income unless an equal or greater increase in the rate of
4taxation on resident income, over the highest rate levied in the
5previous fiscal year, is imposed in the same tax year.

6Section 35. The addition of section 255.1 of the act shall
7not apply to determinations issued by the Secretary of Community
8and Economic Development prior to the effective date of this
9section or to appeals pending on the effective date of this
10section.

11Section <-34 36. This act shall take effect in 60 days.