1Amending Title 53 (Municipalities Generally) of the Pennsylvania
2Consolidated Statutes, in indebtedness and borrowing, further
3providing for definitions, for classification and authority
4to issue bonds and notes, for cost of project, for exclusion
5of other self-liquidating debt to determine net nonelectoral
6debt or net lease rental debt and for preliminary
7authorizations as to financing; providing for preliminary
8approval by the department of the issuance of <-certain debt;
9further providing for <-small borrowing for capital purposes, 
10for debt statement, for submission to department, <-for manner 
11of sale of bonds or notes, for fees for filing, for
12certificate of approval of transcript, for effect of failure
13of timely action by department<-, and for records of
14department; providing <-for duty of advisors; further providing 
15for treatment of costs upon refunding; providing for the 
16offense of knowingly participating in an ultra vires act of a 
17local government unit and for the offense of knowingly filing 
18materially false or misleading certifications or statements 
19with the department <-for duties of participants in Local 
20Government Unit Debt Act transactions; and making a related
21repeal.

22The General Assembly of the Commonwealth of Pennsylvania
23hereby enacts as follows:

24Section 1. The definition of "self-liquidating debt" in
25subsection (b) of section 8002 of Title 53 of the Pennsylvania
26Consolidated Statutes is amended and subsection (c) is amended
27by adding <-a definition definitions to read:

1§ 8002. Definitions.

2* * *

3(b) Exclusions from debt.--With respect to exclusions from
4any particular category of debt and subject to additional
5definitions contained in subsequent provisions of this subpart
6which are applicable to specific provisions of this subpart, the
7following words and phrases when used in this subpart shall have
8the meanings given to them in this section unless the context
9clearly indicates otherwise:

10"Self-liquidating debt." Debt payable solely from rents,
11rates or other charges to the ultimate users of the project, to
12be financed in whole or in part by that debt, or payable solely
13from special levies or assessments of benefits lawfully
14earmarked exclusively for that purpose. The term also includes
15debt or any portion thereof at the time qualified as self-
16liquidating pursuant to this subpart, whether or not solely
17payable from those sources. The term "ultimate users" includes
18the local government unit itself only where its use of the
19project is incidental to the use of the project by other users.
20A debt <-for which with respect to which debt service payments 
21have been made under a guaranty <-of the debt shall not be 
22considered self-liquidating.

23* * *

24(c) Other definitions.--Subject to additional definitions
25contained in subsequent provisions of this subpart which are
26applicable to specific provisions of this subpart, the following
27words and phrases when used in this subpart shall have the
28meanings given to them in this section unless the context
29clearly indicates otherwise:

<-30* * *

1"Financial advisor." A person who for compensation engages
2in the business of advising others, either directly or in
3writing, as to the value of securities, bonds or notes or as to
4the advisability of investing in, purchasing or selling
5securities, bonds or notes. The term does not include an
6attorney, accountant or engineer whose performance of such
7services is solely incidental to the practice of his profession.

8* * *

9"Working capital." An amount which constitutes, under
10generally accepted accounting principles, the cost of the day-
11to-day operations of the project as well as a proper allowance
12for contingencies. Reimbursements under a guaranty or amounts to
<-13address budgetary deficits not related to the project shall not
14constitute reasonable working capital in connection with the
15incurring of debt under this subpart. <-be used to address
16budgetary deficits of a local government unit or for other
17purposes not related to the construction or operation of the
18project do not constitute reasonable working capital in
19connection with the incurring of debt under this subpart.

20Section 2. Sections 8005(c) and (d), 8007, 8026(a)(5) and
218102 of Title 53 are amended to read:

22§ 8005. Classification and authority to issue bonds and notes.

23* * *

24(c) Authority to issue bonds and notes and lease rental 
25debt.--Notwithstanding any other law to the contrary, every
26local government unit shall have full power and authority to
27issue bonds or notes, and make guaranties, leases, subsidy
28contracts or other agreements evidencing the acquisition of
29capital assets payable out of taxes and other general revenues,
30to provide funds for and towards the cost of or the cost of

1completing any project or combination of projects which the
2local government unit is authorized to own, acquire, subsidize,
3operate or lease or to participate in owning, acquiring,
4subsidizing, operating or leasing with others, to issue tax
5anticipation notes and funding bonds or notes as provided in
6this subpart and to contract for insurance covering the risks of
7nonpayment of principal, interest and premium of bonds, notes,
8tax anticipation notes and guaranties. Notwithstanding the 
9foregoing, a local government unit may only issue a guaranty of 
<-10municipal authority debt when the debt is incurred in connection 
11with a loan from the Federal Government, the Pennsylvania 
12Infrastructure Investment Authority or any other instrumentality 
13or agency of the Commonwealth for a water or sanitary sewer 
14project. <-debt of an authority when the debt is incurred for a 
15drinking water, storm sewer or sanitary sewer project, the debt 
16is incurred in connection with a plan or recovery plan approved 
17under the act of July 10, 1987 (P.L.246, No.47), known as the 
18Municipalities Financial Recovery Act, or successor legislation, 
19or the guaranty is necessary to enable the authority to obtain 
20the most competitive interest rate available in the marketplace 
21as demonstrated by comparables.

22(d) Nature of guaranty and prohibition on fees.--The 
23following shall apply to a guaranty:

24(1) For the purpose of this subpart, unless debt
25evidenced by a guaranty has been approved as electoral debt
26in accordance with Subchapter C (relating to procedure for
27securing approval of electors), the guaranty shall be deemed
28to be nonelectoral debt if the local government unit
29guaranties its own bonds or notes and shall be deemed to be
30lease rental debt if it guaranties the bonds or notes of an

1authority or another local government unit. For the purpose
2of all other statutes, the guaranty shall be deemed to create
3debt or indebtedness of the local government unit making the
4guaranty.

5(2) A local government unit is prohibited from
6collecting a fee to guaranty the debt of an authority or
7another local government unit.

8§ 8007. Cost of project.

9The cost of a project includes the amount of all payments to
10contractors or for the acquisition of a project or for lands,
11easements, rights and other appurtenances deemed necessary for
12the project, fees of architects, engineers, appraisers,
13consultants, financial advisors and attorneys incurred in
14connection with the project financing costs, costs of necessary
15printing and advertising, costs of preliminary feasibility
16studies and tests, cost estimates and interest on money borrowed
17to finance the project, if capitalized, to the date of
18completion of construction and, if deemed necessary, for one
19year thereafter, amounts to be placed in reserve funds, if any,
20a reasonable initial working capital for operating the project
21and a proper allowance for contingencies and any amount which
22constitutes, under generally accepted accounting principles, a
23cost of, and which has been determined by an independent actuary
24or other expert to be required for the purposes of, a reserve or
25a contribution toward a combined reserve, pool or other
26arrangement for losses or liabilities covered by a self-
27insurance arrangement established by one or more local
28government units. <-Costs incurred before the fiscal year 
29immediately preceding the date the debt is incurred may not be 
30included in the cost of a project. Reimbursements under a
 

1guaranty or amounts to address budgetary deficits not related to 
2the project shall not constitute a cost of a project in 
3connection with the incurring of debt under this subpart. <-Costs 
4paid, from sources other than the debt that is to be refunded, 
5more than two years before an issuance of new debt to finance 
6the costs may not be included in the costs of a project financed 
7by the new debt. Reimbursements under a guaranty or amounts to 
8be used by a local government unit to address budgetary deficits 
9or other purposes not related to the project do not constitute a 
10cost of a project in connection with the incurring of debt under 
11this subpart. Costs that qualify for funding of unfunded debt 
12under section 8130 (relating to approval by court to fund 
13unfunded debt) may only constitute a cost of a project if the 
14local government unit complies with the requirements of section 
158130.

16§ 8026. Exclusion of other self-liquidating debt to determine
17net nonelectoral debt or net lease rental debt.

18(a) Filings with department.--Self-liquidating debt shall
19not be excluded in determining net nonelectoral debt or net
20lease rental debt for the purpose of establishing net debt of
21either category where the debt is evidenced by general
22obligation bonds or notes, by bonds, notes or other obligations
23of an authority or of another local government unit or by a
24guaranty until there has been filed with and approved by the
25department a report to the local government unit from qualified
26registered engineers or architects or other persons qualified by
27experience appropriate to the project, setting forth:

28* * *

29(5) The estimated net revenues of the project for each
30year of the remaining life of the bonds, notes or obligations

1with a justification for any assumed increase in the gross 
2revenues of more than 5% in any one year and a computation
3showing, in reasonable detail, that the net revenues,
4together with other available funds to be received in respect
5of the project, will be sufficient in each year to pay the
6annual debt service, other than capitalized debt service, on
7the bonds, notes or obligations or a specified aggregate
8principal amount thereof.

9* * *

10§ 8102. Preliminary authorizations as to financing.

11The governing body of a local government unit may express its
12intent to evidence debt as electoral debt, nonelectoral debt or
13lease rental debt. [Action] After obtaining approval by the 
14department under section 8102.1 (relating to preliminary 
15approval by the department of the issuance of debt), if 
16applicable, action may be taken either by resolution, which may
17also provide for the submission of proposals to purchase any
18bonds or notes, or by ordinance. But neither bonds or notes nor
19lease, guaranty, subsidy contract or other agreement evidencing
20lease rental debt shall be authorized other than by the
21enactment of any ordinances required by this subchapter or, in
22the case of notes issued under section 8109 (relating to small
23borrowing for capital purposes), other than by adoption of the
24resolution required under section 8109.

25Section 3. Title 53 is amended by adding a section to read:

26§ 8102.1. Preliminary approval by the department of the
27issuance of <-certain debt.

<-28(a) General rule.--Prior to the adoption of an ordinance or

<-29(a) General rule.--Except as provided in section 8109
30(relating to small borrowing for capital purposes), prior to the

1enactment of an ordinance or adoption of a resolution
2authorizing the issuance of any general obligation bonds or
3notes or guaranteed revenue bonds or notes constituting
4nonelectoral debt or any agreement evidencing lease rental debt,
5a local government unit shall obtain a preliminary authorization
6to incur debt from the department. Authorization shall be
7obtained by filing a notice with the department in the form of a
8certificate signed by two officers of the local government unit.
9The certificate shall include a basic description of the
10intended financing. The department may prescribe the form of the
11certificate. The local government unit may not take any action
12to incur the debt until it receives a preliminary approval from
13the department. The department may require the local government
14unit to also provide evidence of any of the following:

<-15(1) Information satisfactory to the department that the
16local government unit has submitted a current audited
17financial statement. If the department determines that the
18most recent audited financial statements of the local
19government unit do not include a current audited financial
20statement, the department may prohibit the local government
21unit from incurring debt until current audited financial
22statements covering the designated fiscal year or years are
23filed with the department.

24(2) As part of the filing made by the local government
25unit with the department under paragraph (1), information
26demonstrating the type and amount of financial security
27proposed to insure the completion of the project.

<-28(1) Evidence satisfactory to the department that the
29local government unit is current in the filing of its annual
30financial statements with Commonwealth agencies under

1applicable State law.

2(2) A description of the type and amount of payment or
3performance bond, letter or credit or other financial
4security proposed to insure the completion of the project.

5(3) Information satisfactory to the department that the
6local government unit is up to date on all of its municipal
7securities disclosures required under 17 CFR § 240.15c2-12
8(relating to municipal securities disclosure). <-If the
9department is not satisfied that the local government unit is
10in compliance with such disclosure obligations, the
11department may prohibit the local government unit from
12incurring debt until the local government unit provides the
13department with proof of compliance that is satisfactory to
14the department.

15(4) If the local government unit intends for the
16proposed debt to be self-liquidating, information
17satisfactory to the department that the debt will be self-
18liquidating.

<-19(4) If the local government unit intends for the
20proposed debt to be self-liquidating or subsidized, evidence
21satisfactory to the department that the debt will qualify as
22self-liquidating or subsidized debt, including filings
23required under section 8024 (relating to exclusion of
24subsidized debt from net nonelectoral debt or net lease
25rental debt), 8025 (relating to exclusion of self-liquidating
26debt evidenced by revenue bonds or notes to determine net
27nonelectoral debt) or 8026 (relating to exclusion of other
28self-liquidating debt to determine net nonelectoral debt or
29net lease rental debt), as applicable.

30(5) If the local government unit has existing debt which

1was previously approved by the department as subsidized or
2self-liquidating, information satisfactory to the department
3that the debt continues to be treated as subsidized or self-
4liquidating and that no decrease in the amount to be excluded
5is required by any change in circumstances, other than
6resulting from the payments of the debt, or, if there has
7been a change in circumstances, information demonstrating to
8the satisfaction of the department the amount of debt that
9should continue to be treated as subsidized or self-
10liquidating.

11(6) If the local government unit wishes to issue
12refunding debt <-for a purpose other than as set forth in
13section 8241(b)(1) (relating to power to refund), information
14satisfactory to the department that the refunding is a sound
15financial transaction and is in the best long-term financial
16interest of the local government unit.

17(7) If the local government unit intends that the debt
18to be issued provides that over 10% of the proceeds of the
19debt will be used for working capital, information
20satisfactory to the department that the financing is a sound
21financial transaction and is in the best long-term financial
22interest of the local government unit.,<- schedules
23demonstrating the estimated net debt service impact of the
24transaction and a certification that the local government
25adopted or approved a plan to provide the tax or other
26revenues necessary to pay the debt service on the debt.

27(7) The debt statement required by section 8110
28(relating to debt statement).

29(8) A statement of the intended manner of sale of the
30bonds or notes.

1(9) A project cost statement detailing the intended uses
2of debt proceeds.

3(b) Additional information.--After receipt by the department
4of a filing by a local government unit under subsection (a), the
5department may request and the local government unit shall
6provide additional information which the department deems
7necessary to <-avoid an unsound financial transaction or a
8financial transaction which is not in the best long-term
9financial interest of the local government unit. <-understand the
10structure and purpose of the proposed transaction, including:

11(1) justification for costs of issuance exceeding 2% of
12the principal amount of the proposed debt;

13(2) justification for the use of more than 10% of the
14proceeds of the debt for working capital; and

15(3) if bonds or notes are to be sold at private sale by
16negotiation, the basis for the local government unit's
17finding that the bonds or notes are in the best financial
18interests of the local government unit.

19(c) Action by department.--If the department, upon review of
20the filing made by the local government unit under subsection
21(a) and any additional information provided under subsection
22(b), if applicable, finds that:

23(1) The requirements are satisfied in connection with
24the proposed debt, the department shall issue a preliminary
25approval of the debt.

26(2) The requirements are not satisfied in connection
27with the proposed debt, the department shall issue a
28preliminary disapproval of the debt and the local government
29may not proceed to incur the debt.

30(d) Timely action required.--The department shall have <-60 30

1days after receipt of the filing required under subsection (a)
2to issue a preliminary approval or disapproval of the debt.

3(e) Incurrence of debt.--Upon issuance of preliminary
4approval of the department, the local government unit shall have
<-5six months one year to incur the debt under this subpart. The
6bonds or notes shall be sold, or instruments evidencing lease
7rental debt delivered, not more than <-one year two years
8following the date of the preliminary approval.

9(f) Review.--All determinations by the department under this
10section are reviewable as provided under 2 Pa.C.S. Ch. 7
11(relating to judicial review).

<-12Section 3.1. Sections 8109(a)(1) and 8110(b) of Title 53 are
13amended to read:

14§ 8109. Small borrowing for capital purposes.

15(a) General rule.--Any local government unit may incur debt
16by resolution rather than by ordinance to be evidenced by notes
17to provide funds for a project as defined in this subpart
18without complying with the requirements of Subchapter A of
19Chapter 82 (relating to Department of Community and Economic
20Development) if:

21(1) The aggregate amount of the debt outstanding at any
22one time shall not exceed the lesser of [$125,000] $250,000
23or 30% of the nonelectoral debt limit as authorized in
24section 8022(a) (relating to limitations on incurring of
25other debt).

26* * *

27§ 8110. Debt statement.

28* * *

29(b) Previously excluded self-liquidating or subsidized 
30debt.--Where debt has previously been excluded as self-

1liquidating or subsidized debt, the debt statement shall be 
2accompanied by a certification that either:

3(1) no decrease in the amounts to be excluded is 
4required by any change of circumstances other than decreases 
5resulting from the payments of bonds or notes; or [,if there 
6has been a change, other than decreases resulting from the 
7payments of bonds or notes, so that less debt is to be 
8excluded. If it has become possible to exclude a greater 
9amount of debt and the local government unit desires to do 
10so, the debt statement shall be accompanied by appropriate 
11certificates supporting the revised amount to be excluded, 
12and a revised approval shall be obtained from the 
13department.]

14(2) a decrease in the amounts to be excluded is required
15due to a change in circumstances, in which case the change in
16circumstances must be described.

17A debt previously established as self-liquidating for which
18payments are made under a guarantee of the local government unit
19is no longer considered self-liquidating unless and until the
20local government unit files with the department a new report
21satisfying the requirements of section 8025 (relating to
22exclusion of self-liquidating debt evidenced by revenue bonds or
23notes to determine net nonelectoral debt) or 8026 (relating to
24exclusion of other self-liquidating debt to determine net
25nonelectoral debt or net lease rental debt), as the case may be.

26Section 4. Section 8111(a) of Title 53 is amended by adding
27paragraphs to read:

28§ 8111. Submission to department.

29(a) General rule.--Before delivering any bonds or notes
30other than notes representing small borrowings issued under

1section 8109 (relating to small borrowing for capital purposes),
2the local government unit shall apply for and receive or be
3deemed to have received the approval of the department under
4section 8204 (relating to certificate of approval of transcript)
5or 8206 (relating to effect of failure of timely action by
6department). The application, in such form as the department
7prescribes, shall be accompanied by a transcript of the
8proceedings consisting of certified copies of any of the
9following, not previously filed, which are applicable:

10* * *

11(8) <-Proof of obtainment of Written proof of obtainment
12of or agreement to obtain the required financial security to
13insure the completion of the project.

14(9) An itemized statement of all <-disbursements estimated
15disbursements for costs to be made from the proceeds of the
16borrowing. <-Not more than 2% of debt proceeds may be
17distributed for the cost of issuing the debt.

18* * *

19Section 5. Sections 8161(a),<- 8203, 8204, 8206 and 8207(a)
20and (c) of Title 53 are amended to read:

<-21§ 8161. Manner of sale of bonds or notes.

22(a) General rule.--Except as otherwise specifically provided
23in this subpart and subject to subsection (b), bonds or notes
24may be sold at public or private sale by negotiation or upon
25invitation and at the price the governing body of the issuing
26local government unit shall determine. Before making any private
27sale by negotiation of bonds or notes[, the governing body shall
28adopt a resolution finding that a private sale by negotiation
29is] of more than $5,000,000 in any fiscal year, the governing
30body shall submit to the department satisfactory evidence that

1exceeding the limit is necessary and in the best financial
2interest of the local government unit. Bonds or notes may be
3conditionally sold before the final details of the series are
4fixed.

5* * *

6§ 8203. Fees for filing.

7Every filing under this subpart with the department shall be
8accompanied by a filing fee [as determined in section 605-A of 
9the act of April 9, 1929 (P.L.177, No.175), known as The 
10Administrative Code of 1929.] of $250. In addition, the filing 
11shall be accompanied by an additional fee of 1/32 mill on each 
12dollar of the aggregate principal amount of the debt relating to 
13the filing. No submission shall constitute a filing until the
14proper fee is paid. All fees received under this section shall
15be [paid by the department into the State Treasury through the
16Department of Revenue.] deposited into the Local Government Unit 
17Debt Act Administrative Account, established as follows:

18(1) There is hereby established a restricted receipt
19account within the General Fund of the State Treasury which
20shall be known as the Local Government Unit Debt Act
21Administrative Account.

22(2) All moneys in the Local Government Unit Debt Act
23Administrative Account shall be held in trust solely for the
24purpose of defraying the costs of the administration of this
25subpart and shall be earmarked for the use of and annually
26appropriated to the department for disbursement solely for
27that purpose. The account shall be subject to audit by the
28Auditor General.

29§ 8204. Certificate of final approval [of transcript].

30The department shall, upon receipt of any bond or note

1transcripts or other filings, carefully examine them to
2determine whether the debt outstanding and to be outstanding is
3within the applicable limitations imposed by this subpart and
4whether the proceedings for incurring the debt, for issuing and
5selling the bonds or notes and for excluding self-liquidating
6and subsidized debt have been taken in conformity with the
7Constitution of Pennsylvania and this subpart. If, upon
8completion of its examination, a transcript or other filing is
9found by the department to be in conformity with the
10Constitution of Pennsylvania and this subpart, the department
11shall certify its approval to the local government unit if
12required under other provisions of this subpart.

13§ 8206. Effect of failure of timely action by department.

14If the local government unit has submitted [a filing] an 
15application for final approval to the department by certified
16mail, return receipt requested, or otherwise has an official
17receipt from the department, and the local government unit has
18not, within [20] 30 days of the date of receipt of the filing by
19the department, received the certificate of final approval or
20disapproval or notification of correctable error, the filing
21shall be deemed to have been approved for all purposes unless
22the local government unit has extended the time within which the
23department may act by written communication to the department or
24by failure to object to a written communication from the
25department requesting the extension. Extensions shall not exceed
26one additional period of [20] 30 days.

27§ 8207. Records of department.

28(a) Retention period.--The department shall keep all
29proceedings <-and including all applications and statements by a 
30local government unit under sections 8102.1 (relating to
 

1preliminary approval by the department of the issuance of debt) 
2and, 8111 (relating to submission to department) <-and 8201 
3(relating to certification to department of bond or note 
4transcript or lease, guaranty, subsidy contract or other 
5agreement) on file for a period of not less than [four months
6after issuance of its certificate of approval or disapproval and
7thereafter as long as any appeal respecting the proceedings is
8pending and not finally determined.] five years after the debt 
9issuance has been paid off by the local government unit. The 
10department shall also keep copies of all documents filed with 
11the department relating to a qualified interest rate management 
12agreement for as long as the qualified interest rate management 
13agreement is in effect.

14* * *

15(c) Records open for inspection.--[The records of the
16department shall be public records available for examination by
17any citizen of this Commonwealth or any bondholders or
18noteholders.] All submissions, determinations and records of the 
19department under this subpart, including those related to 
20qualified interest rate management agreements and including 
21correspondence with the interested parties to any debt 
22proceeding, shall be public records available for examination by 
23any citizen of this Commonwealth, any interested parties or any 
24bondholder or noteholder, including holders of tax anticipation 
25notes, of the local government unit.

26Section 6. <-Chapter 82 of Title 53 is amended by adding a
27section <-subchapter to read:

<-28§ 8212. Duty of advisors.

29In regards to a transaction under this subpart, an attorney
30or financial advisor to a local government unit shall stand in a

1fiduciary relationship to the local government unit and shall
2perform loyally, in good faith and in a manner the attorney or
3financial advisor reasonably believes to be in the best
4interests of the local government unit. The attorney or
5financial advisor shall act with such care, including reasonable
6inquiry, skill and diligence that a person of ordinary prudence
7would use under similar circumstances.

8Section 7. Section 8242(a) of Title 53 is amended to read:

9§ 8242. Treatment of costs upon refunding.

10(a) General rule.--In any refunding, a principal amount of
11refunding bonds or notes or obligations evidencing lease rental
12debt equal to the sum of the following:

13(1) the call premium payable on the bonds, notes or
14obligations being refunded;

15(2) the discount allowed on the sale of the refunding
16bonds, notes or obligations;

17[(2.1) any funds borrowed in order to pay any
18termination payment required to be paid under a qualified
19interest rate management agreement in which the notional
20amount is identified as corresponding to all or any portion
21of the bond or note being refunded;]

22(3) any funds borrowed to pay interest on bonds, notes
23or obligations being refunded; and

24(4) the costs of issue and sale of the refunding bonds,
25notes or obligations;

26may be considered as interest on the refunding bonds, notes or
27obligations and may be separately stated in all reporting of
28debt and in all computation of debt limits and, if so considered
29and reported by the local government unit, shall not be
30considered as electoral, nonelectoral or lease rental debt. In

1subsequent debt statements, any such separately stated principal
2amount of bonds, notes or obligations shall be reported as being
3amortized in the same proportion as the series of which they are
4a part.

5* * *

6Section 8. Title 53 is amended by adding sections to read:

7§ 8272. Knowingly participating in an ultra vires act of a
8local government unit.

9(a) General rule.--Any officer or any member of the
10governing body of any local government unit or any member of a
11law firm or a financial advisor firm who assists or provides
12advice to a local government unit and who knowingly participates
13in an ultra vires act of a local government unit commits a
14misdemeanor of the second degree and shall, upon conviction, be
15sentenced to pay a fine of not more than $5,000 or to
16imprisonment for not more than two years, or both.

17(b) Prohibition.--A law firm or financial advisor firm which
18has had a member convicted under subsection (a) shall be
19prohibited for two years from assisting a local government unit
20with or providing advice to a local government unit for any
21activity under this subpart.

22(c) Definition.--An act is an "ultra vires act" when the
23local government unit is without authority to perform the act or
24when the act is not explicitly prohibited, but is in excess of
25the authority granted to the local government unit.

26§ 8273. Knowingly filing materially false or misleading
27certifications or statements with the department.

28(a) General rule.--Any officer or any member of the
29governing body of any local government unit or any member of a
30law firm or a financial advisor firm who knowingly files a

1materially false or misleading certification or statement with
2the department commits a misdemeanor of the second degree and
3shall, upon conviction, be sentenced to pay a fine of not more
4than $5,000 or to imprisonment for not more than two years, or
5both.

6(b) Aiding or abetting.--Any officer or any member of the
7governing body of any local government unit or any member of a
8law firm or a financial advisor firm who assists or provides
9advice to a local government unit and who aids or abets in the
10commission of the offense under subsection (a) commits a
11misdemeanor of the second degree and shall, upon conviction, be
12sentenced to pay a fine of not more than $5,000 or to
13imprisonment for not more than two years, or both.

14(c) Prohibition.--A law firm or financial advisor firm which
15has been convicted or which has had a member convicted under
16subsection (b) shall be prohibited for two years from assisting
17a local government unit with or providing advice to a local
18government unit for any activity under this subpart.

<-19SUBCHAPTER G

20MISCELLANEOUS PROVISIONS

21§ 8291. Duties of participants in Local Government Unit Debt
22Act transactions.

23(a) Certification of representation.--With regard to each
24transaction under this subpart, an attorney or financial advisor
25shall advise the local government unit in writing as to the
26party being represented by the attorney or financial advisor,
27the source from which the attorney or financial advisor will
28receive compensation for services related to the transaction and
29whether the compensation is dependent upon the issuance of debt
30by the local government unit.

1(b) Fiduciary duty.--An attorney or financial advisor
2retained by or who purports to advise a local government unit
3with regard to a transaction under this subpart shall stand in a
4fiduciary relationship to the local government unit and shall
5perform loyally, in good faith and in a manner the attorney or
6financial advisor reasonably believes to be in the best
7interests of the local government unit. The attorney or
8financial advisor shall act with such care, including reasonable
9inquiry, skill and diligence that a person of ordinary prudence
10would use under similar circumstances and provide opinion both
11as to positive and negative possible impacts of the transaction.
12An attorney or financial advisor in the course of his
13representation is entitled to rely on reasonable representations
14and certifications made to them by architects, engineers and
15other persons retained by and the officers and employees of the
16local government unit in connection with the transaction.

17(c) Ultra vires acts.--An officer or member of the governing
18body of a local government unit or a financial advisor or
19attorney may not knowingly participate in an ultra vires act.
20For purposes of this subsection, an act is ultra vires when:

21(1) the local government unit is without authority to
22perform the act; or

23(2) the act is not explicitly prohibited but is in
24excess of the authority granted to the local government unit.

25(d) Materially false or misleading certifications.--An
26officer or member of the governing body of a local government
27unit or an attorney or financial advisor may not knowingly file
28a materially false or misleading certification or statement with
29the department under this act.

30(e) Penalties.--

1(1) An officer or member of the governing body of a
2local government unit or an attorney or financial advisor who
3aids or participates in the commission of an act prohibited
4in subsection (c) or (d) commits a misdemeanor of the second
5degree and shall, upon conviction, be sentenced to pay a fine
6of not more than $5,000 or to imprisonment for not more than
7two years, or both.

8(2) Notwithstanding paragraph (1), a local government 
9may seek civil judicial redress for a violation of this 
10section that results in damages to the local government unit 
11not caused by the local government unit or its agents. A 
12local government unit shall prohibit or restrict the future 
13participation in transactions under this subpart of an 
14attorney or financial advisor who violates this section and 
15may also prohibit or restrict participation of a firm that 
16employs the attorney or financial advisor for a period not to 
17exceed two years.

18Section <-9 7. Repeals are as follows:

19(1) The General Assembly declares that the repeal under
20paragraph (2) is necessary to effectuate the amendment of 53
21Pa.C.S. § 8203.

22(2) Section 605-A of the act of April 9, 1929 (P.L.177,
23No.175), known as The Administrative Code of 1929, is
24repealed.

25(3) All acts and parts of acts are repealed insofar as
26they are inconsistent with the amendment or addition of 53
27Pa.C.S. §§ 8002(b) and (c), 8005(c) and (d), 8007,
288026(a)(5), 8102, 8102.1, 8<-111(a), 8161(a), 8203, 8204, 8206,
298207(a) and (c)<-, 8212, 8242(a), 8272 and 8273 and 8291.

30Section <-10 8. This act shall take effect in 60 days.